Only 15 listed companies at most would have to restructure their shareholdings to meet the new foreign business ownership rules approved yesterday, according to Stock Exchange of Thailand president Patareeya Benjapolchai.

"Most of them are in the telecom and property sectors," she said.

"We thought the impact would have been greater due to the lack of information and understanding of the draft amendments. But when the details were revealed, we found out that the impact for the entire market, which has nearly 500 listed companies, is quite limited."

She did not identify the 15 companies.

Patareeya's comments came as the stock market took another nose-dive.

It tumbled 2.69 per cent as spooked investors reacted to the Cabinet's agreement in principle to the revised Foreign Business Act.

The SET Composite Index slumped to the day's trough at 615.66 in a knee-jerk response to the Cabinet's resolution reported in the afternoon, before rebounding slightly to close the day at 616.75. Turnover was moderate at Bt21.81 billion.

Foreign investors dumped Thai shares with net sales of Bt274.79 million.

Bangkok Bank was off 3.54 per cent at Bt95.50, PTT dropped 3.03 per cent to Bt192, and Siam Commercial Bank fell 6.60 per cent to Bt49.50.

"Investors sold off their shares on fears that many listed companies would have to restructure their shareholdings, following the amendments.

"However, now that the impact is limited, they should not be panicky," said Patareeya.

The stock market has suffered a series of hard blows and has given up 15.58 per cent of its value since the Bank of Thailand on December 19 adopted harsh measures to counter baht speculation.

The New Year's Eve bombings also gave a sharp jolt to the market.

Wiriya Lappromrattana, assistant vice president at Kiatnakin Securities, said the approval of the amended Foreign Business Act was to blame for the plunge in local share prices.

"This fact could be seen from the stock market's steep fall after the law was endorsed, though the government will give foreign investors a certain period to comply with it," she said.

As amended, the law limits foreign investors to holding no more than 50 per cent of the shares or voting rights of local companies.

The revised legislation will give foreign investors up to one year to rectify their shareholdings, and two years to adjust their voting rights.

Wiriya said she still recommended investors to hold cash rather than stocks, even though some stocks are attractive.

"Investors can start considering piling up on some stocks with good fundamentals when the SET ranges around 600-610," Wiriya said.

Thanomsak Saharatchai, a director of Capital Nomura Securities, estimates that 0.5-1 percentage point would be shaved off of gross domestic product from a combination of the recent bomb blasts in the capital and fallout from tightening up the Foreign Business Act.

These factors will also threaten the earnings of listed companies, he said.

However, he sought to soothe market jitters by saying that the road to the next general election had become a step clearer now that the head of the Constitution Drafting Assembly was appointed.

Under the government's time frame, the assembly must complete drafting a new, permanent constitution within a period of 180 days.

Siriporn Chanjindamanee

The Nation