Thai investors have shifted to derivatives products because of sporadic financial market volatility and greater investment knowledge, says KGI Securities Thailand.
Lin Chih-Hung, chief operating officer of KGI, said stock markets in Taiwan and Thailand are similar in terms of investor structure, with the majority of trading value coming from individual investors.
Retail investors previously accounted for 60-70% of trading in the Thai stock market, but the portion has declined to below 50% over the past couple of years.
In Taiwan, trading in the futures market has become more active than in the equity market, as investors prefer short-term trading through futures contracts. This is because they can invest in various derivatives products and can leverage a large profit under any market conditions from a small investment amount.
Mr Lin said Thailand's stock market has developed similar trading patterns to the bourse in Taiwan.
The Stock Exchange of Thailand (SET) reports that trading value on the Thailand Futures Exchange (TFEX) is equal to the SET's trading value. The TFEX has taken about 14 years of development, and there is potential for growth in the exchange's trading value to become higher than that of the SET.
"When investors understand how to make a profit on derivatives products and trading in the futures market, they will invest a higher volume in the TFEX," Mr Lin said.
Training and education are key to greater investment knowledge and understanding, he said.
KGI has been training marketing staff on investment knowledge and advises investors on multi-investment products to help diversify investment risk.
Artificial intelligence, robo-trading and algorithm trading programmes are also offered for advanced investors.
The company has a 10% market share of trading on the TFEX and has ranked first since 2013.
Commission fees from securities trading have continued to decline despite higher trading value, but the company has offset the impact by increasing internet-based trading with low commission fees as an investment incentive, Mr Lin said.
KGI plans to open one or two new branches this year to increase total branches to 18. The new branches will be in provinces such as Chiang Mai and Khon Kaen or areas along the Eastern Economic Corridor that contain many Chinese people and families living and working there.
The company also plans to shut down two Bangkok branches on account of high competition and low trading activity.
KGI registered a net profit of 1.08 billion baht last year, up from 887 million the previous year, with a net profit margin of 30.9%.