This was the warning from the Federation of Thai Capital Market Organisations that met yesterday with the Stock Exchange of Thailand to discuss the impact of the Bank of Thailand's stringent anti-speculation action.

It also suggested authorities scrap the measure to save the Thai capital market, which has been in the doldrums since it was introduced on December 19.

Kongkiat Opaswongkarn, CEO of Asia Plus Securities, said the federation would take around two weeks to gather in-depth information from its five associations of the damage caused by the central bank's measure. They would then submit the information to the authorities.

Although there was no clear solution from yesterday's meeting, the participants agreed that listed companies had felt the pinch from the withholding measure. They warned this would eventually affect economic growth as the capital market is a crucial driver of the Kingdom's gross domestic product.

Kongkiat, president of the federation, said over the past 10 years listed companies had raised funds as large as Bt1.7 trillion from the stock market, while bank lending contributed to business funds by only Bt900 billion over the same period.

Market capitalisation at the end of December was Bt5.1 trillion, while banks' total loans were Bt5.6 trillion. Outstanding issued debentures were recorded at Bt3.85 trillion.

"Raising funds has mainly been done via the capital market as it is the key engine and all parties agree that it is an essential factor for the economy," he said.

Kongkiat said 400-500 listed companies had apparently been affected by the measure as many of them have had to delay raising funds.

Chanin Vongkusolkit, president of Banpu, said listed companies were evaluating the impact from the measure on their fund-raising plans.

"These 400-500 firms are the core engine to the country's economy. If they have problems with fund-raising, our economy will be affected," Chanin said.

Maris Tarab, managing director of ING Funds Management (Thailand) and also chairman of the Association of Investment Management Companies, said many listed companies could not raise funds via property funds due to the measure.

The withholding measure has made issuers including Central Pattana postpone launches of property funds. If fund-raising is postponed, some companies have to face higher funding costs, he said.

JP Morgan Securities (Thailand) president Marco Sucharitakul strongly recommended on behalf of the foreign brokerage house association that the government should scrap the stringent measure if they want to see the stock market recover. Only relaxing the rule would not help, he said.

"Otherwise, the stock market will be sluggish for a long period. If this government doesn't care about foreign investors, please say so. I would be able to tell them clearly," Marco said.

Siriporn Chanjindamanee

The Nation