Thailand‘s uptick rule was enforced on July 1, 2024. Following initial setbacks where the Thai stock market closed lower on July 1st and 2nd, there has been a shift in sentiment as the market has enjoyed a four-day winning streak, reflecting a total increase of 2.63% in performance. This suggests that the uptick rule may have had a slow start but is now beginning to demonstrate its impact.
Markets believed that short selling, especially a naked short selling, distorts the market and causes it to fluctuate as Thailand’s SET Index was the world’s worst performer prior to this implementation.
Kiatnakin Phatra Securities, a leading brokerage firm in Thailand, was the top mover among brokers in terms of total value. However, since the implementation of the uptick rule, the value from Kiatnakin Phatra has decreased significantly from over 20 billion baht to approximately 10 billion baht, indicating changes in trading behavior as a result of the new regulation.
Other brokers also see a significant drop as well, cutting their total trading value about half.
Short-selling value in the Thai stock market saw a significant drop from 4-5 billion baht a day to slightly above a billion baht a day.
Initially, there were doubts about the effectiveness of the uptick rule, with concerns raised about its inability to positively influence the Thai stock market due to prevailing challenges such as political uncertainties and delays in government stimulus measures. The market experienced declines following the rule’s debut, with the SET Index closing lower and reaching a new low since November 2020.
Despite these challenges, recent market movements suggest a potential turnaround, with the uptick rule potentially playing a role in the market’s improved performance. The impact of political uncertainties continues to loom over the market, contributing to a cautious investor sentiment and a preference for selling off stocks as a risk mitigation strategy.
Overall, the recent uptrend in the Thai stock market amidst the uptick rule implementation signifies a shift in market dynamics, highlighting the evolving impact of regulatory changes on market behavior and investor sentiment.
