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Published on November 2, 2007

The SET board of governors has resolved to hire foreign expertise to carry out the study on its future status, chairman Pakorn Malakul Na Ayudhya told reporters yesterday.

"We will allow foreign experts to submit their study proposals next week and the outcome is expected to be available in the middle of next year," he said.

The study will contain pros and cons as well as suggestions for three options for the future of the exchange. First, the SET's status will be maintained but endorsed by a special law. Second, the SET will be demutualised but not listed on the stock market. Lastly, the SET will be turned into a profit-making firm and list on the bourse.

Most stock exchanges overseas have already demutualised and succeeded, Pakorn said. Only the SET, the Jakarta Stock Exchange, the Shanghai Stock Exchange, the Ho Chi Minh City Stock Exchange and the Tel Aviv Stock Exchange have yet to demutualise.

"Organisation-reform guidelines and stock-market development are the most important things due to the fast-changing environment. Stock exchanges played a role as supervisor in the past but they must be facilitators now," he said.

Given the small size of the Thai stock market, it is difficult for the SET to compete with other bourses to attract foreign investors and raising competitiveness is therefore important, he said.

There are 521 companies listed on the SET and the Market for Alternative Investment. Their cumulative market capitalisation accounts for 90 per cent of the country's gross domestic product (GDP). The SET weighs only 2 per cent in the MSCI ex-Japan Index. Comparatively, over 700 firms list on the Kuala Lumpur Stock Exchange and their combined market capitalisation represents 125 per cent of the country's GDP. It weighs 5 per cent in the MSCI ex-Japan Index.

To attract non-listed companies, the SET and the Securities and Exchange Commission have loosened listing criteria and provided corporate income tax incentives to them.

At least 30 companies are expected to go public next year, said Pakorn.

Siriporn Chanjindamanee, The Nation