'Uncertainty making gossip unmanageable'

"The financial market is very sensitive to rumour, especially when the country is facing double uncertainty in both politics and the economy," said Sompop Manarungsan, economics lecturer at Chulalongkorn University.

Rumours that His Majesty's health had deteriorated last month sent the stock index plummeting. Authorities blamed some speculators as being behind the rumour.

Sompop said that some foreign investors view Thailand as facing a political crisis. "It's a crisis at the political institution level regarding personal influence," said Sompop.

Finance Minister Korn Chatika-vanij yesterday revealed a plan to counter rumours that may rock the stock market in the future, similar to last month's turmoil.

Sompop said there is uncertainty that the US recovery may be W-shaped. While the Thailand relies heavily on export markets, slow recovery for major markets would adversely affect the local economic recovery. "Given the double uncertainty, the authorities would not be able to manage rumours effectively," Sompop said.

Vorapol Socatiyanurak, vice chairman of the National Economic and Social Advisory Council, shared Sompop's views.

He said investors are nervous and sensitive to every piece of news concerning political, economic and social affairs when the share prices are seen to be peaking. The local stock index had risen sharply, close to 70 per cent from the start of the year, before the rumours spread last month.

"There are also many other factors that may cause the market to plunge, such as investors changing their investment perspective about prospects of economic recovery and corporate earnings in the next 12 months," said Vorapol, an expert on financial market.

Some investors may or may not believe rumours, he said.

"The best way the authorities can deal with it is to provide correct information to every market participant," added Vorapol.

Korn yesterday met officials at the Securities and Exchange Commission and Stock Exchange of Thailand.

Korn said the authorities had not yet found any evidence that the two suspects accused by police of spreading rumours financially gained from the stock trading last month.

Police on Sunday arrested two suspects and charged them with spreading false information.

Korn said he had asked SEC and SET to look into trading accounts of other people who may be linked to the two suspects.

He said he had been informed that a few people made profits during the high market volatility. "But we cannot say that they are linked to the rumour. Let the police do their jobs" said Korn.

Korn said to manage rumour in the future, the SET has to report what was happening to the SEC, Bank of Thailand and Finance Ministry when the stock index drops by 4 or 5 per cent. "If the rumours concern politics or national security, the finance minister would respond and provide accurate news to the public," said Korn.

Thirachai Phuvanatnaranubala, secretary-general of the SEC, said he would ask the stock brokerage firms to provide information about stock trading of relatives or people who are connected with the two suspects.