SET resolved to keep crown
The Thai bourse charts out strategies to remain as Asean’s top stock exchange in average trading value, the title it stole from the Singapore Exchange in 2014, writes Nuntawun Polkuamdee
Having been Asean’s top bourse for trading value since 2014, when it stole the crown from the Singapore Exchange, the Stock Exchange of Thailand (SET) aims to retain its pole position by doubling its market value and average daily turnover in the next four years.
It is the SET’s uppermost goal to increase its average daily trading value to 100 billion baht by 2020 from the current 53 billion and boost its market capitalisation to 30 trillion baht from 15 trillion, Santi Kiranand, a senior executive vice-president and head of issuer marketing division, told the Bangkok Post in an exclusive interview.
It will not be easy to double the market value in only four years, while it has taken 35-40 years to reach the current level, he said, adding that bolstering both demand and supply is the key to success.
Adding further real estate investment trusts (REITs) and infrastructure funds, encouraging more foreign-based firms to list on the Thai market, and raising market valuation are the SET’s main strategies to strengthen demand, he said.
The Thai bourse must adopt different ways to increase demand and offer new products as the number of companies qualified to list on the SET and the second tier Market for Alternative Investment is small, said Mr Santi. The SET cannot rely solely on new listed companies to expand the market size in the future, he added.
Unlike non-listed companies, the size of REITs is still small and has the potential to help increase the SET’s market value.
Mr Santi said REITs could play a more active role in the stock market due to the higher business skills of REIT managers, the trusts’ ability to have higher leverage than property funds and borrow from financial institutions for business expansion, and making inroads into the overseas market.
Current regulations allow other professionals in addition to asset management firms and property developers to become REIT managers, enabling them to improve their skills.
“From next year, we will see new REITs with a significant market size listing on the SET. They will be managed by professionals and have the potential to invest in offshore real estate. REITs in the Thai market are still expanding their business, for example, in the hotel sector,” said Mr Santi.
A government-sponsored infrastructure fund will be another product that will see a surge in market size, he said. This is the 100-billion-baht Thailand Future Fund, which pools big-ticket infrastructure projects, due to be launched early next year.
Mr Santi said the SET’s goal to retain its position as Asean’s top trading value market has compelled it to set an ambitious business plan to compete with other markets in attracting investors, particularly foreigners, as market size, price-toearnings ratio (P/E), trading liquidity and facilities as well as rules and regulations are the factors they consider when making investment decisions.
“If we can increase market capitalisation, offer quality products and manage the competitiveness of the market’s P/E, then we’re still on foreign investors’ radar screen,” he said.
The first company purely owned by foreigners is expected to seek listing on the SET by the end of this year and another company in Asean is keen on doing the same, thanks to the relaxed foreign listing regulations of the Thai stock market, he said.
On the supply side, the SET has continuously developed its trading technology platform and investment applications to promote the local market and improve financial literacy through investment seminars and local and international roadshows.
Unveiling new products for the futures market such as Gold-D (gold spot trading featuring delivery of physical gold, which will be launched in the fourth quarter) and other new derivatives products are another way to increase supply, said Mr Santi.
Despite the advent of the Alternative Trading System (ATS) — a non-exchange trading venue that matches buyers and sellers for transactions — and the Securities and Exchange Commission’s plan to implement ATS in the future, he said it would not have an adverse on the SET’s operation.
“Under the plan, the SET will put much effort into maintaining its title as the top trading value bourse in the region. Competition from regional peers is not a worry if we try our best to achieve our goal,” he said.