US bank fears hit Asia stocks

US bank fears hit Asia stocks

Thai bourse tumbles almost 50 points

The Thai stock exchange fell more than 3%, almost 50 points, yesterday in tandem with most Asian stock markets due to fears of contagion effects from the collapse of US banks.

The Stock Exchange of Thailand (SET) index closed yesterday at 1,523.99, down 49.18 points or -3.13% in trade worth 103.8 billion baht.

The SET pointed out that investors had overreacted to what has occurred, and the agency and the Securities and Exchange Commission (SEC) are preparing to implement circuit-breaking measures in a bid to control the situation.

SET president Pakorn Peetathawatchai said that the plunge took place not only in Thailand but also in Asian and European stocks.

This was, he said, due to several factors, including the falling Brent crude oil price, a slow recovery of the global economy, rising interest rates, declining financial liquidities, and the failure of Silicon Valley Bank (SVB), the second-biggest US bank failure ever.

The government has responded with measures, such as deposit guarantees, Mr Pakorn said, adding that no forced selling or short selling was detected yesterday.

Mr Pakorn said that foreign investors and institutional investors yesterday sold out Thai shares to avoid the volatility caused by the US bank failures.

They were expected to move their money to safe-haven assets such as US dollars and gold, he said.

He further added that the Thai stock market has overreacted to the current situation with the US collapsed banks being specialised lenders for startups and technology businesses, so the impact should be limited.

Praoporn Senanarong, assistant secretary-general of SEC, said that there were reports of Moody’s Investors Service downgrading the debt ratings of collapsed New York-based Signature Bank deep into junk territory and placing the ratings of six other US banks under review for a downgrade, sparking panic selling of shares in overseas banks.

In light of this, the SEC will hold talks with the SET to come up with circuit-breaker measures to temporarily halt trading to curb panic selling on the stock market if the market plunges by 5%, 8% or 10%, Ms Praoporn said.

The sudden failure of SVB on Friday, followed by Signature Bank two days later, sparked heavy market losses worldwide on fears of a domino effect that could heighten recession risks around the world.

Equity markets were well in the red in Asian trade yesterday, with Tokyo, Hong Kong and Seoul more than 2% down, while Sydney, Taipei, Manila, Jakarta and Bangkok all shed more than 1%. Shanghai, Mumbai, Singapore and Wellington also sank.