SET backs automated reports

SET backs automated reports

Artificial intelligence seen as beneficial tool

The Stock Exchange of Thailand (SET) will talk with other capital market organisations this week and seek ideas for boosting the number of analysts and increasing the overall quality of Thailand's capital market.

Besides helping to set up an academy fostering a new generation of analysts, the bourse will support automated reports delivered by an artificial intelligence (AI) tool.

Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organisations (Fetco), has pushed the academy idea to foster the development of new-generation analysts, increase stock coverage and generate a variety of reports that meet international standards.

"The SET also agrees with having more market research coverage, because this is useful for investors and issuers," said SET president Pakorn Peetathawatchai. "Apart from setting up an academy, automated reports provided by an AI tool, along with collaboration from other market participants, are also on the table."

Mr Pakorn said all listed companies should have research coverage, be it from human analysts, AI tools or fintech apparatus.

The SET, Fetco and the Securities and Exchange Commission will meet this week to discuss a plan to support increased research coverage of several capital market products.

Company snapshot

The idea of setting up an analyst academy is a Fetco pet project of many years. Varied analyst reports can help share prices move according to their fundamental value, rather than relying on technical analysis forecasting the direction of prices.

But price competition in the brokerage business has forced securities companies to cut operating cost, meaning fewer analyst reports and reduced headcount.

The SET handles trading of 2,478 securities, including preferred shares, warrants, derivative warrants, exchange traded funds and the common shares of 759 companies listed on the SET and the Market for Alternative Investment (MAI).

Analyst reports, however, cover only 276 stocks, of which 243 are SET-listed companies and the rest trade on the MAI.

A lack of analysts contributes to existing low coverage: the number has declined to 280 from 340 a decade ago.

The MAI has tried to solve the problem for many years, such as by provide funding to brokers to expand research coverage for small and medium-sized companies.

Yet the issue remains unsolved.

In recent years, MAI president Prapan Charoenprawat initiated a "company snapshot", a two-page summary report provided by a listed company to give investors information about non-covered companies on a voluntarily basis.

Of the 154 MAI-listed companies, 114 have helped investors under the snapshot scheme, with 45 firms providing a snapshot in both Thai and English.

But the snapshot has no target price, recommendations or opinions from third-party analysts.

Pros and cons

The SET is preparing a database as a machine-readable format, so that data can be used by either analysts or AI, Mr Pakorn said.

Asked whether a series of fintech applications is sufficient to serve investors' needs, Mr Pakorn responded that fintech has both pros and cons.

Advantages include providing a variety of research topics with several sources and timely coverage information, along with diversity in terms of analytic angles.

Reliability and quality, however, are the main disadvantages of fintech applications.

AI that is mostly used in equity trading is associated with trading programmes to help process activities that humans are able to perform, but at a slower speed, Mr Paiboon said.

AI, though, still requires guidance from humans.

"Without data, AI cannot continue to 'live', so we must create and select good data for AI to learn," Mr Paiboon said. "But the problem is we do not have enough data analysis."

Sometimes flesh is better

In today's world, robots are used in many industries and are ready to replace some tasks performed by humans, including jobs in the financial realm.

But at least one prominent figure in the financial sector thinks humans can perform better than robots at certain tasks.

"Fintech and AI can help in terms of quantitative analysis, but they cannot walk and talk to clients and perform company visits," said Nuttachart Mekmasin, executive director of Trinity Securities' research department.

The industry faces a shortage of analysts, Mr Nuttachart said. The industry needs more, but there are limitations, including the need to have five years of experience to obtain a licence for media interviews, as well as job pressure stemming from investors' profit expectations.

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