"The current capital-market problem is not caused by too few products in the market, but rather too few retail investors," ACL Securities president Wiboon Perm-arayawong said late on Wednesday.

"Although the market has tried to solve this problem so far, the increase was from the number of total trading accounts, not active retail investors. Over the past four years, active retail investors have remained unchanged at only 100,000," he said.

Daily trading volume has steadily declined over the past two years, from about Bt20 billion in 2004, about Bt16 billion in 2005 and last year and just Bt6 billion this year.

Some 500,000 investors have opened individual trading accounts with securities firms, but only 100,000 are active.

New retail investors still hesitate to try out the stock market, leaving trading limited to the same group of retail investors, while the number of institutional investors - both local and foreign - has kept rising.

Wiboon said the trading ratio between retail and institutional investors, both local and foreign, used to be 70:30. The trading share of retail investors slid to 62 per cent, 55 per cent and 47 per cent in 2005, last year and last month, respectively. The trading proportion of institutional investors rose from 45 per cent last year to 53 per cent early this year. Foreign institutional investors alone have built their presence up from 22 per cent last year to 35-40 per cent today.

Wiboon said ACL Securities' two upcountry branches had racked up losses, due to the bearish trading climate. The firm is considering whether to review its branch-expansion plan in the provinces. It may not be worth investing in such amid the current listless market. His company has five branches in all.

Ayudhya Securities chief executive MR Sasiprin Chandratat also said trading by retail investors had fallen off due to the pessimistic market. He said his company was considering whether to give up any of its five branches in Bangkok.

"Not every branch of ours makes a profit. Some do, but some don't. We plan to close some branches in Bangkok that don't make any profits, because retail investors have low trading activity," said Sasiprin.

Securities firms operate a combined 196 branches in Bangkok and 220 upcountry.

Meanwhile, Stock Exchange of Thailand (SET) president Patareeya Benjapholchai said the SET was analysing the trade-offs in privatisation, as many markets in India, Malaysia and US had already followed that path.

"I think privatisation is a big issue for us and requires time for study. We currently see the need for privatisation, which has been the global trend so far," she said.

Siriporn Chanjindamanee

The Nation