The Federation of Thai Capital Market Organizations (Fetco) plans to pitch capital market mechanisms to the Finance Ministry next week to help the country's economic recovery.
Fetco will propose developing a fund for the government to raise public funds for infrastructure projects and building new fundraising channels for small and medium-sized enterprises (SMEs).
Chairman Paiboon Nalinthrangkurn said the two initiatives will be raised at a meeting with the Finance Ministry next week. If the government moves forward on either proposal, it will first conduct a feasibility study.
The infrastructure fund/opportunity fund would be a capital instrument whereby the government could raise money from the public to invest in infrastructure projects without taking on more debt. The government could reserve its debt financing for other necessary projects in the future.
"The public debt level is presently quite high, as the government has raised debt financing to stimulate the economy," Mr Paiboon said, adding that capital markets are also a key aspect of the country's economy and should take part in solving problems.
The current ratio of public debt to GDP is 51.64%. The public debt management framework imposes a ceiling of 60%.
The second mechanism, Mr Paiboon said, would add more channels for SMEs to raise funds or set up a new marketplace for firms that are too small to go public on the Stock Exchange of Thailand (SET).
In the first quarter, domestic bourses saw a hard correction due to the coronavirus outbreak. Fetco pushed the idea of the Super Savings Fund and SSF Extra, which are 10-year funds to replace the long-term fund that were intended to help support capital markets when they were in full panic after the domestic outbreak.
Mr Paiboon said local bourses have recovered relatively well despite the looming risk of a second wave of infections and growing political unrest. Fetco is setting its sights on helping the rest of the economy recover from the crisis.
"The SET index will probably not fall back to its lowest point from March, as the government has shown it has handled the outbreak quite well," he said.
Mr Paiboon said the SET is still undervalued compared with other indices in the region and could recover by a much as 1,400 points by the end of this year, in line with a broader economic recovery.
The SET index fell 0.9% yesterday to close at 1,296.79 points in trade worth 49.04 billion baht. Investors grew skittish from the ongoing pandemic and economic crisis, as well as developing political risks.
Many large-cap stocks fell, including CP All, down 1.6% to close at 63 baht; PTT, down 2.7% to close at 36.25 baht; and Kasikornbank, down 2.3% to close at 85.75 baht.
"We put more weight on political instability than a second-wave outbreak in Thailand because if the political situation escalates, it could have a more devastating impact on the economy, which has already been severely affected in the first half of the year," said Therdsak Taveeteeratham, executive vice-president of Asia Plus Securities.
Investors are advised to keep additional cash on hand and invest in good dividend stocks to reduce risk and prepare for a potential resurgence of market volatility later in the year.
Mr Therdsak said it remains to be seen whether the protests will escalate and result in violence and political turmoil. Many large investment projects are tied to the current government and could be in jeopardy if the regime loses power.
"We give the political risk in the country a score of seven out of 10," Mr Therdsak said.
He said the resurgence of the contagion in the country poses a lower risk because of the Thai public health system's proven track record of handling the disease.
Mr Therdsak said stocks offering high dividend yield at the moment include Dynasty Ceramic (around 6%), MCS Steel (6%), Digital Telecommunications Infrastructure Fund (5-6%) and InTouch Holdings (4%).
Veeravat Virochpoka, vice-president of Finansia Syrus Securities, said investors should monitor closely both the disease and the political situation to safeguard investments against potential volatility.
Globally, economic signals remain bleak, he said, exemplified by the Federal Reserve message to investors to invest in low-risk assets such as electricity and dividend stocks.
The SET index should have a strong support at 1,250 points and resistance at 1,300, Mr Veeravat said.