Thai Stock Index Slumps Most in Asia on Property Curb Concern

Thai stocks dropped the most in Asia as central bank comments about high credit growth and elevated asset prices triggered speculation about new curbs on property lending.

The benchmark SET Index slid 1.9 percent, the most since March 22, to close at 1,520.52 in Bangkok. The gauge’s 30-day volatility rose to 19.9, the highest since June 22. Land & Houses Pcl, the nation’s biggest residential property developer by market value, tumbled 4.8 percent, the most since Aug. 24.

The Bank of Thailand said it would be vigilant about asset-price risks as it left its benchmark interest rate unchanged for a fourth straight meeting. The central bank may take steps to curb property prices after detecting hot spots especially in the condominium segments, The Nation reported today.

“Potential curbs on mortgage loans will hurt investor sentiment on commercial banks and residential property developers,” Pongrat Ratanatavanananda, an analyst at Maybank Kim Eng Securities (Thailand) Pcl, said by phone today. “That would affect the outlook for loan growth and residential property sales.”

The central bank is concerned that a jump in property prices in some areas may create a “bubble risk,” Bank of Thailand Assistant Governor Paiboon Kittisrikangwan said today. Low interest rates will encourage people to invest in risky assets, which may lead to asset prices rising “beyond fundamental levels,” he said.

Developers, Banks

Quality Houses Pcl dropped 8.9 percent to 3.90 baht, the biggest decline since May 2009. SC Asset Corp., controlled by Prime Minister Yingluck Shinawatra’s family, lost 5.5 percent to 30 baht.

Among lenders, Bank of Ayudhya Pcl slipped 3.6 percent to 33.25 baht. Kasikornbank Pcl fell 1.5 percent to 203 baht.

The Thai gauge has gained 9.2 percent this year, extending a 36 percent rally in 2012, as domestic investment and consumption recovered from floods in 2011 that were the worst in almost seven decades. The government has increased minimum wages and offered tax incentives for automobile purchases to boost economic growth.

-- With assistance from Suttinee Yuvejwattana. Editors: Darren Boey, Tony Jordan