SET hastens free-float share calculation changes

SET hastens free-float share calculation changes

The Stock Exchange of Thailand (SET) is expediting revisions on methods to calculate free-float shares of listed firms to more accurately determine the actual amount of shares available to the public.

The self-regulating agency insists on maintaining the required percentage of the minimum free float at 15-20%, in line with international standards.

"The current percentage of free-float shares required at 15-20% is adequate, but the calculation methodology must be revised to reflect the actual amount of free-float shares available in the market," said Pakorn Peetathawatchai, the SET president.

Free float, also known as public float, refers to the shares of a company that can be publicly traded and are not restricted or held by the company's shareholders or insiders. Mr Pakorn said shares under the category of free float that have not been traded or moved for a long time should not be included in the free-float calculation because they are considered illiquid.

"Free float and market liquidity are matters of great importance. We will revise the methodology and propose the issue for a public hearing as quickly as possible," he said.

Mr Pakorn said there would be a new warning sign to alert investors, in addition to the C sign for "cash balance requirement".

The SET is also poised to revise the SET Index calculation methodology by substituting free float-adjusted market capitalisation for full market capitalisation.

Paradorn Tiaranapramot, assistant vice-president at Asia Plus Securities (ASPS), said the SET's measures will help reduce market volatility based on speculation regarding low free-float stocks. Investors will have more confidence in investing in large-cap stocks with over 30% free float, he said.

An industry analyst who requested anonymity said the SET is likely to increase the portion of free-float shareholding to more than 20%. If so, it would possibly put stocks with low free float on the SET50 and SET100 at risk of losing their place on the listings.

According to an ASPS survey, there are seven companies in the SET50 and SET100 with low free float: Delta Electronics (DELTA), Global Power Synergy Plc (GPSC), Asset World Corp (AWC), VGI Plc (VGI), Banpu Power (BPP), CK Power (CKP) and Absolute Clean Energy (ACE).

Another criteria the SET could implement is adjusted market capitalisation. This could accurately depict stock that is distributed to retail investors, reducing market volatility and giving investors more confidence, while large free-float stocks would receive more attention, the analyst said.

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