The Stock Exchange of Thailand (SET) yesterday rushed to ease concerns after a plunge in Credit Suisse shares, reigniting worries about a possible banking crisis.
The Thai bourse, following a significant rebound on Wednesday in line with other regional markets, was down by nearly 1% in the morning session and the losses deepened in early afternoon trade.
"We insist the plunge of the SET index is caused by external factors, not internal issues," SET president Pakorn Peetathawatchai told a press briefing yesterday.
"The Credit Suisse situation won't affect the Thai stock market and we believe the Swiss authorities can deal with the issue. They have stepped in to provide liquidity to the bank already."
Elsewhere in the region, bourses retreated yesterday with bank shares suffering a renewed selloff.
The MSCI Asia Pacific Financials Index slid by as much as 2%, headed for its fourth loss in five sessions, while Hong Kong's Hang Seng index fell 1.7%.
China's Shanghai Shenzhen CSI 300 and Shanghai Composite indices lost 1.2% and 1.1%, respectively. Japan's Nikkei 225 index dropped by 0.8%.
While the rout in Asian markets briefly paused on Wednesday, fresh concerns over a global banking crisis were triggered as Credit Suisse shares dipped after the beleaguered Swiss lender said it would borrow up to US$54 billion from the Swiss National Bank to support liquidity.
"Now all eyes are on Credit Suisse after its share price fell sharply and depositors made large withdrawals from the bank. Its credit default swap rose sharply," said Amonthep Chawla, executive vice-president and head of research at CIMB Thai Bank.
"This bank is too big for the Swiss central bank to let it collapse. The Swiss National Bank recently injected some money to boost the bank's liquidity, but using public money to stabilise the situation cannot last long. The central bank did that to prevent the bank's share price from sliding further and to restore public confidence."
He said Credit Suisse's management has to find additional funding. The bank is classified as a systemically important financial institution, meaning if it collapses, it will damage the overall economy, requiring it to have a higher shareholders' ratio than other banks.
"Credit Suisse is much larger than Silicon Valley Bank and its collapse would cause a serious problem," said Mr Amonthep, referring to the US bank that closed late last week, along with two of its other US peers: Silvergate Bank and Signature Bank.
Mr Pakorn from the SET said the Thai unit of the Zurich-based Swiss investment bank has maintained normal operations with adequate reserves according to the central bank's requirements, and no signs of any problems.
"Although there are some equities in the Thai market that belong to Credit Suisse, they are held by custodians or the bank holds them on behalf of its customers," he said.
"Credit Suisse does not directly invest in the Thai market."
However, Mr Pakorn said the stock market would remain highly volatile because of the banking woes in the US and Europe.
The SET has prepared additional measures in case the index falls sharply, he said.
"We prepared measures if the market worries are exaggerated and the public panics," said Mr Pakorn.
"We may have to launch the measures to prevent volatility in the market, but at this stage we need to focus on communicating with the public in consultation with investors and related regulators. These measures worked effectively to cope with market volatility in the past, but there is no need to do anything now."
The SET index closed yesterday at 1,554.65 points, down 0.66%, in trade worth 69.7 billion baht.
