KTB Securities Thailand (KTBST) is partnering with Hong Kong-based Haitong International Securities in a bid to break into the China market and profit from the potential rebound in the Chinese economy once the nation's trade conflict with the US eases.
"The trade war is a challenge that is overshadowing the capital market in China, but we think the situation will improve in the next 2-3 months," said Chatree Rojana-arpa, senior executive vice-president for strategy and product development at KTBST.
"We think it is a good time to invest while other investors are reluctant, as the market will turn around soon."
The partnership between KTBST and Haitong, through Haitong's Singaporean subsidiary, allows the Thai firm greater access to China, while Haitong gains a local player to help Chinese firms and investors invest in Thai companies. Haitong also sees Thailand as a launching pad to the high-growth, emerging CLMV (Cambodia, Laos, Myanmar, Vietnam) market.
According to Mr Chatree, KTBST can give its clients more attractive financial offerings in China because Chinese companies grow on average 15% a year, compared with 5% for Thai companies, and a 10-year bond in China gives returns of 3-5% versus 2% in Thailand.
China also has a higher S&P credit rating of A+, compared with Thailand's BBB+.
"The last meeting between the US and China sounded better than the time before, and I believe the next meeting will help resolve some of the tensions," Mr Chatree said. "And China has surplus capital to stimulate its economy before trade talks turn around."
Chen Xuan, chief executive of Haitong International Singapore, said trade tensions have affected business, but he believes a resolution will benefit the business environment in both Singapore and Hong Kong.
He said the ongoing protests in Hong Kong over the extradition law have not affected the city's financial health.
"For this week we already did a great deal, a US$500-million bond at a rate of 3.75%," Mr Chen said. "Bond issuance in Hong Kong has been very successful and I do not believe the business world has been affected."
While Haitong sees Singapore as its Southeast Asia hub, it sees Thailand as a gateway into CLMV countries and Mr Chen says his company needs a local partner to do business here.
"We want greater collaboration and backing before we launch our IPO," said Win Udomrachtavanich, executive chairman of KTBST. "We need a bridge between Asean and China."
KTBST, which is majority owned by the South Korean firm KTB Securities and Investments, plans to list on the Stock Exchange of Thailand in the coming year or so, but needs to first build up the size of the company.
Mr Win has a positive view of China, saying Chinese stocks still have limited downside and the government will likely implement policies to stimulate the economy in the near future.