SET lobbies for dollar-denominated trades

SET lobbies for dollar-denominated trades

A Stock Exchange of Thailand employee enters the new office on Ratchadaphisek Road. The SET expects a market cap worth 200% of GDP within 10 years. PATIPAT JANTHONG
A Stock Exchange of Thailand employee enters the new office on Ratchadaphisek Road. The SET expects a market cap worth 200% of GDP within 10 years. PATIPAT JANTHONG

The Stock Exchange of Thailand is pursuing Bank of Thailand permission for US-dollar-denominated trade settlements of foreign companies to be listed on the local bourse alongside commodities to offer convenience for investors.

Easing the rules to allow stocks and commodities to be traded in dollars would sharpen the Thai stock market's competitiveness, but the decision rests with the central bank, SET president Kesara Manchusree said.

Trading in the Thai stock market is limited to baht, while other bourses offer dollar-denominated settlement. This divergence is a stumbling block as the local market vies with others to attract fund inflows.

With dollar-denominated pricing and settlement, foreign investors can avoid risk from currency fluctuation.

In a related development, the SET is aiming at a market capitalisation worth double Thai GDP within the next 10 years.

The SET has a market value of 12-13 trillion baht, representing 100-120% of GDP. By comparison, the bourse's market cap was 30-40% of GDP before the 1997 financial crisis.

Initial public offerings (IPOs) are expected to add 270 billion baht to the SET's market capitalisation this year, Mrs Kesara said.

She intends for the SET's average trading value to reach 60 billion baht a day in 2018 and 100 billion in 2020.

The average daily trading volume of the Thailand Futures Exchange is targeted at 230,000 contracts this year, up from 200,000 last year.

To achieve its goals, the SET will continue to promote itself through regular events such as Thailand Focus.

The SET intends to hold four international roadshows and two local roadshows this year, senior executive vice-president Santi Kiranand said.

International roadshows are planned for the US, Europe, Singapore, Hong Kong and Japan, while executives of companies listed in the SET50 and SET100 will be approached to join the events and present information to foreign investors.

"The Thai stock market is attractive, as it is becoming one of the world's outperformers this year," Mr Santi said.

"Amid the wild swings in the global market after the fall in oil prices, investment in the Thai bourse remains attractive, as local listed companies still make a profit."

The SET has a long-term goal of becoming a leading stock market in the region by attracting more companies to list on the exchange.

Apart from IPOs, the SET's market value can be enlarged through mergers and acquisitions involving foreign companies, Mr Santi said, adding that those companies listed on the SET50 index had the most potential for takeover deals.

The SET will also redress an imbalance in investor structure by raising trade from institutional and foreign investors and proprietary broker trade to half the total.

Retail investors dominate the Thai stock market at 55% of trade value, with foreign investors making up 20-25%, institutional investors 10-12% and brokers the rest.

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