SET vies to be funding hot spot
New products eyed to build regional inroads
Two new investment products — an infrastructure fund and depository receipt (DR) — are expected to be launched this quarter to enhance the Stock Exchange of Thailand (SET)’s status as a regional fundraising destination for foreign companies.
Thailand’s bourse plans to expand investment products that can connect the Thai capital market to other regional markets, with DRs expected t o be launched this quarter, said SET president Pakorn Peetathawatchai.
The DRs will be in the form of foreign mutual funds, whereby brokerage firms will purchase regional mutual funds, place them in a trust fund and issue a DR later.
DR is a type of negotiable and transferable financial security that is traded on a local stock exchange but represents a security, usually in the form of equity, that is issued by a publicly listed foreign company. DR, which is a physical certificate, allows investors to hold shares in the equity of other countries.
DRs can also help Thai investors to get exposure to foreign investment products via local currency investment, with no requirement of opening a trading account abroad.
DR was introduced i n Thailand two years ago, but no one issued this investment product for Thai investors.
Mr Pakorn said the SET also plans to increase its role to facilitate infrastructure project financing in neighbouring countries and help foreign companies raise funds from Thailand’s capital market.
With such an initiative in the pipeline, the Thailand Future Fund is expected to be launched this quarter to boost regional infrastructure project financing.
The bourse aims to become a fundraising destination for infrastructure development projects in Laos, Myanmar and Cambodia, where sales of electricity generation from these projects will be sold to Thailand, he said. The Thai government has discussed a fundraising method via an infrastructure trust with countries along the Mekong River.
“Infrastructure projects are a part of the well-being economy and can help us connect to other countries in the region,” said Mr Pakorn.
Although Thailand’s stock market ranks in the top spot in terms of liquidity and capital funding for businesses, the bourse should present new selling points to attract investment incentives from foreign investors, he said.
“Besides the 10 new industries promoted by the government, Thailand can be a well-being economy, as we have the world’s largest airport operator, are one of the top 10 operators in hospitality and have some of the world’s top-ranked companies in the food and tourism sectors,” said Mr Pakorn.
Today the SET has 48 listed well-being companies, with combined market capitalisation of 2.9 trillion baht, representing 16% of the total.
Airports of Thailand Plc, Bangkok Dusit Medical Services Plc, Bumrungrad Hospital Plc, Central Pattana Plc and Minor International Plc are among the 48 listed well-being companies.
Mr Pakorn said Thailand has great potential to be a regional economic centre, with the Thai capital market linking to neighbouring countries through infrastructure project financing.
The domestic stock market outlook this half still faces uncertainties from external factors, including the US central bank’s interest rate normalisation, tapering of monetary stimulus programmes by major central banks and the Sino-US trade row, he said. But financial volatility this half is expected to be lower than in the first because of Thailand’s sound economic fundamentals, said Mr Pakorn.