BANGKOK- Thai markets were steady on Tuesday, as investors snubbed worries about the government considering a tax on share sales by individual investors, as analysts see low probability of the plan becoming policy.
The government is looking to increase revenue by introducing a transaction tax of 0.11% on equities sales that would apply to investors with a volume of more than 1 million baht ($31,065.55) per month, Reuters reported on Monday after markets closed.
The benchmark index closed 0.77% higher on Tuesday, as analysts said the proposal was unlikely to become policy because the hit on liquidity would drive away investors, reduce liquidity, making it difficult for the government to implement.
"I don't think they will... do it," said Amonthep Chawla, head of research office at CIMB Thai Bank, adding that larger investors could go to other markets.
Impact on liquidity would also make investment in the Stock Exchange of Thailand less attractive.
The tax would not be a "double negative" because it would add to cost and limit trading volume and liquidity, Krungsri Securities managing director, Vikas Kwatra, said.
"If liquidity is poor, it will turn off foreign traders," he said.
($1 = 32.1900 baht)
(Reporting by Orathai Sriring, Chayut Setboonsarng and Panu Wongcha-um; Editing by Ed Davies and Rashmi Aich) ((orathai.sriring@tr.com;))