The Stock Exchange of Thailand (SET) has developed a strategic business plan to attract foreign industries with operations in Thailand as well as family businesses to list on the Thai bourse, aiming to prop up market capitalisation.
Speaking in an interview with the Bangkok Post, SET executives said investment trends have changed considerably, especially after the pandemic, driven by the rise of technology stocks while traditional businesses try to thrive in the digital age.
The Thai market has been marred by trust and confidence issues related to small-cap stocks, causing significant fund outflows, said the officials.
The SET created more stringent measures to cope with naked short selling, program trading and high frequency trading (HFT) to make trading more transparent and allow all groups of investors to grow evenly.
In addition, rules were passed to increase investor confidence, especially in program trading, scheduled for implementation in the third quarter as foreign investors are expected to return to Thai stocks in the second half this year, when the economy picks up to support the ongoing tourism recovery, said executives.
INVESTOR INTEREST
SET president Pakorn Peetathawatchai said although the size of the Thai stock market has greatly decreased, there are good signs from foreign investors, who expressed their intent to continuously invest in Thailand based on a recent SET roadshow to Hong Kong at the end of May.
"Foreign investors have continuously invested in Thailand as the Thai market offer various options for fund mobilisation, not only for large firms but also small enterprises and startups," said Mr Pakorn.
Manpong Senanarong, senior executive vice-president of the SET, said the bourse wants to attract foreign companies keen on business relocation, particularly those that already have business in Thailand. He said these companies include those in the clean energy sector, electric vehicles (EVs) and companies in government-promoted S-curve industries.
In addition to EV makers, there are businesses in supply chains, including Thai companies, that want to raise funds through initial public offerings (IPOs) on the SET, said Mr Manpong.
For example, Line Man, the Southeast Asian unicorn, said last year it appointed advisors to prepare for an IPO of its food delivery business in Thailand, with a listing planned for 2025.
Italian fashion house Prada previously relocated part of its business from Milan by debuting an IPO on the Hong Kong stock exchange, he said.
"Line Corp is interested in entering the Thai stock market, partly because its business in Thailand has been growing well," said Mr Manpong.
FAMILY BUSINESS
In addition, the SET is focused on family businesses, as there are many such large groups in Thailand, some of which are interested in listing on the Thai bourse, he said.
From 2013 to 2018, many family businesses and local brands listed on the stock market. As businesses return to post substantial growth, more businesses may follow suit, said Mr Manpong.
Compared with other regional bourses, notably the fast-growing Vietnamese market, he said Thailand has advantages in terms of law, stability of financial institutions, and preferable regulations for money transfers out of the country.
Major challenges for growth of the Thai stock market include geopolitics, elevated interest rates, the uneven recovery of the Thai economy and the effects of climate change.
Mr Pakorn said foreign operators in tourism and related sectors are interested in relocation to Thailand or investment in Thai stocks.
"The problem is we have little supply for them to invest in, or the stocks are too small," he said.
"We must accelerate the expansion of these businesses to support increasing demand, including in the 'well-being economy' related to eateries, travel, hotels and healthcare."
Geopolitical conflicts often affect oil prices, causing costs to vary for the business sector. Regarding interest rates, if a more appropriate level is approved in the second half of the year, it would attract more investment in high-risk assets including stocks, said Mr Pakorn.
Climate change will likely have an impact on Thai GDP because it can affect crop output and exports, he said, adding local economic growth is uneven, with tourism now a leader.