SEC reassures investors on its ability to cope with SET plunge

Economy January 09, 2014 00:00


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THE SECURITIES and Exchange Commission is assessing the financial health of brokerage houses and asset-management companies ahead of next week's planned "Bangkok shutdown", while insisting it will be able to handle the situation even if the stock market s

Vorapol Socatiyanurak, secretary-general of the SEC, expressed his confidence that services for investors would remain intact, after convening with the Stock Exchange of Thailand, securities firms and fund companies to discuss business continuity planning.

The SEC has closely monitored the situation and has assessed possible impacts of the demonstrations on Thai capital markets through brokerage firms’ daily reports and stress tests.

The stress tests assume the SET Index dropping by 5-15 per cent for five consecutive days.

“The SEC consistently does stress tests on brokerage firms’ status on a daily basis. The latest was on January 3. If the SET Index falls by 5 per cent for five consecutive days, which has never happened before, brokerage houses can cope with such drops because of the small amount of margin loans. They total only Bt40 billion,” Vorapol said.

JFCCT statement

The commission has also examined securities and fund companies, whose financial status remains normal and able to handle emergency situations or market volatility. Funds’ unit redemption also remains normal.

Worried about the escalating political chaos in Thailand, the Joint Foreign Chambers of Commerce (JFCCT) issued a statement on December 27 urging a predictable and stable political environment, as well as a peaceful solution to the conflict to boost foreign investors’ confidence.

The JFCCT comprises 28 foreign chambers. The statement was signed by chairman Stanley Kang on behalf of the members.

In the declaration, the JFCCT said that as foreigners its members did not get involved in Thai politics but as stakeholders in the economy the present divide gave foreign communities much concern. The members of the various chambers and business associations make significant contributions to trade and investment and thus to the economy, it said.

“To boost foreign investments, foreign investors need predictability and a stable political environment where the rule of law prevails with zero acceptance of corruption,” the statement said.

“Based on experiences elsewhere, foreign investors can observe that to achieve that, various long-term, sustainable reforms are needed, and we note the recommendations of the seven major business groups in Thailand seeking, amongst other changes, electoral reform.

“The foreign chambers are members of the Board of Trade and they are in full support for such a call.

“They believe that the path to resolve these issues to close the divide has to be chosen by the Thai people without any foreign interference.

“The JFCCT as an important stakeholder in the economy encourages all parties to find peaceful and lasting solutions to the current issues to ensure economic well-being, and happiness of all the people of the Kingdom of Thailand.

“We do support positive developments and oppose threats that would undermine the development of Thailand,” it said.

The JFCCT has a combined membership of more than 8,000 people.

The benchmark SET Index yesterday dropped by 4.63 points to close at 1,257.73 with total trading value amounting to Bt36.28 billion.