The Thai capital market has good potential to develop and remain a regional leader amidst global challenges and rapid changes in financial markets, say analysts.
Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organizations (Fetco), said the global economy and capital markets are still in the transition from crisis to recovery.
"I believe over the next five years, the investment landscape will change a lot both in terms of foreign direct investment and investment in secondary markets such as the stock and bond markets, with more foreigners coming in and moving head offices to Bangkok," said Mr Kobsak.
"Thailand's infrastructure is being enhanced, with several mass-transit railways under development. When completed, Thailand will have better competitiveness when compared with Singapore. Coupled with a cheaper cost of living than the city-state, and Bangkok is one of the best places to live and work in the world."
At a seminar hosted by Fetco on Thursday, analysts presented a white paper entitled "Improving Thailand's Capital Market Competitiveness and Efficiency", which was jointly prepared by the Capital Market Development Fund (CMDF) and McKinsey & Company (Thailand).
The paper said the Thai capital market has developed into a regional leader in terms of competitiveness and market efficiency, especially in raising cash equity and the fixed income market.
However, the cost of stock trades in the Stock Exchange of Thailand is higher than in many countries in Southeast Asia, except for Indonesia.
The Thai market must improve cost efficiency management to maintain a leading position in the region in the face of rapid global changes, according to the paper.
Mr Kobsak said Thailand has been the regional leader for fundraising through initial public offerings for many years.
The market capitalisation of the stock market is 120% of the country's GDP and the bond market is 100% of GDP, both of which have played an important role in supporting Thailand's economy, he said.
The emergence of digital assets and cryptocurrency exchanges have allowed Thai companies to mobilise funds outside the country and investors can choose to buy shares of the world's leading companies easily, said Mr Kobsak.
"We must be well prepared for future changes to maintain the Thai capital market as the regional leader," he said.
Chanan Chanchainarong, managing director of CMDF, said Thailand's imposition of a financial transaction tax requires careful consideration to avoid negative impacts on the capital market and the overall economy.
In some countries that levy such a tax, government can collect more revenue, but stock trading volume decreases substantially, he said.
The Thai capital market should also seriously consider taking steps to develop necessary national frameworks regarding sustainability, such as establishing a carbon exchange and national green tax to support financing for climate change projects, said Mr Chanan.