To revive investors' interest in traditional stocks, the Stock Exchange of Thailand (SET) is preparing to add new foreign stocks on the bourse to provide investors with more choices which can be easily traded through an online platform.
According to Pakorn Peetathawatchai, president of the SET, many popular foreign stocks on international exchanges including the New York Stock Exchange, Nasdaq, European, Chinese and Japanese stock exchanges, will be available for trading on the Thai bourse in the future through a product called fractional depositary receipt (DR).
He said this was the SET's chance to lure back some investors that were now flocking to cryptocurrencies and foreign tech stocks in the hope of high returns.
DR is a type of 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 foreign publicly listed company. DRs allow investors to invest in shares of foreign companies in their local currency.
According to Mr Pakorn, DRs generally represent fractional ownership of the underlying stock, with each DR representing one half, one third, one quarter or even one tenth of an underlying share. The price of the DR usually trades close to the value of the underlying shares on a currency conversion.
The SET is currently waiting for the regulatory framework for DRs from the Securities and Exchange Commission.
After the regulations have been approved and settled, securities firms will be allowed to issue DRs tied to more securities exchanges besides the regional bourses such as DRs from the Vietnam Stock Exchange that are now offered by Bualuang Securities, he said.
The SET said the asset value of foreign investment funds doubled during the pandemic from 100 billion baht to 200 billion baht, suggesting that investors are more interested in global stocks thanks to high returns.
"We hope the new product will attract investment and allow investors to easily access global stocks with lower prices through online trading platforms," Mr Pakorn said.
When asked about the bourse's potential involvement with cryptocurrencies, the SET said it will not operate any cryptocurrency exchange but is planning to carry out an asset tokenisation which has high potential for growth, and expects to open the platform for the tokenisation next year.
"We support any securities company interested in working with cryptocurrency exchanges to cover more investment products," Mr Pakorn said.
The local cryptocurrency market has grown exponentially this year as the trading account opening process has become much simpler and faster. The market also has an advantage in terms of convenience as digital assets can be traded 24 hours a day and are highly volatile, which suits the risk appetite of speculative traders, said Mr Pakorn.
For the investment outlook next year, the SET's senior executive vice-president Soraphol Tulayasathien said value stocks, environmental, social and governance stocks, and global stocks will continue to grow in line with the mega trends.
Mr Pakorn said that the factors to monitor next year are oil prices that will affect listed companies' operational costs and liquidity, and the pandemic situation.