Speculation, hedging drive TFEX trade
Rise attributed to bullish outlook
Trading volume on the Thailand Futures Exchange (TFEX) has increased twofold from last year thanks to buoyant stock trading and rising commodity prices, prompting investors to speculate and hedge against investment risks in futures products.
Trade on the TFEX has been very active this year, averaging 513,940 contracts per day with 170,000 contracts classified as SET50 index futures, said TFEX managing director Rinjai Chakornpipat.
Average foreign trade volume for SET50 index futures has also increased to 25% of the total on a daily basis from 10% logged last year. Last year’s daily average trade volume registered 324,217 contracts.
Such heavy trade is attributed to investors’ speculation over the bourse’s bullish outlook, said Ms Rinjai.
The most active trading products are SET50 futures and single-stock futures, where both investment products have a combined market share around 60-70% of total trade, up from 50% last year, she said. Gold futures contracts have also registered active trading this year.
“As there is a positive outlook for the stock market this year, investors are interested in SET50 index futures and singlestock futures,” said Ms Rinjai.
“With the bourse’s volatile turnover, investors can profit from TFEX products for both upward and downward directions on the stock market.”
Sutthisit Jamdee, assistant managing director at Kasikorn Securities, said blocktrade for single-stock futures is very popular among investors and he expects that more than half of total TFEX trade will consist of blocktrade transactions.
Blocktrade transactions of single-stock futures are orders or trades submitted for sale or purchase of a large quantity of single-stock futures with low liquidity.
This enables i nvestors to bilaterally arrange large-volume transactions with a securities company. However, the minimum trading quantity for each blocktrade transaction must comply with TFEX regulations.
Separately, TFEX and the Association of Futures Markets (AFM), which has 25 global futures exchanges as members, yesterday hosted the 21st annual conference in Bangkok with discussions focused on the rapid growth of domestic financial services and the regional futures industry.
Ms Rinjai said AFM members are interested in attracting more retail investors to trade on the futures market in hopes of generating greater financial liquidity.
TFEX and the Stock Exchange of Thailand have continued to invest in education programmes and investment training courses in order to equip investors with a good understanding of futures trading, product risks, and investment returns, she said.