AFET eyes 'unenthusiastic' asset management firms

However, asset-management companies remain unenthusiastic about putting money into Afet because the investment is high-risk and trading volume is low.

Moreover, the Securities and Exchange Commission (SEC) does not allow them to invest directly in the market, although they can invest via foreign mutual funds.

Afet president Nitus Patrayotin yesterday said the exchange had traded a daily average of 597 contracts so far this year, up 84.2 per cent from the same period last year.

The average number of daily trades of natural rubber ribbed smoked sheets No 3 (RSS3) is 389, representing 65 per cent of the volume, followed by white rice 5 per cent (BWR5) at 206 daily contracts. Other trades account for the remaining 1 per cent.

"The outstanding performance of Afet is the trading quantity of RSS3, which is higher than that traded in Singapore and Osaka of Japan, while BWR5's trading quantity has also significantly increased. Besides, Japan's market has brought the Afet price of RSS3 for reference in the index calculation of natural rubber products, and an increasing number of Thai farmers have used the Afet price to quote their products," said Nitus.

He said the exchange's development strategy for next year was to increase the number of investors by providing trade channels with Thai and foreign equity brokers and urging Thai asset-management companies to establish commodity funds for investing in Afet. It will also increase new products to the market and educate people about Afet investment.

However, asset-management companies remain unenthusiastic about investing in the futures exchange.

Vivat Vinichchayakul, chief executive officer of SVE Asset, said the risk was still high, including floods or other natural disasters, which could affect commodity prices, while the warehousing system also had problems.

"I don't dare to establish a fund, especially when raising people's money for investment. It would be difficult to give investors an answer if there were any loss from their investment.

"If Afet would like asset-management companies to invest, we might be able to spare some investment - such as 5 per cent or 10 per cent of the fund - while the main investment would be diversified to other markets such as equities, structured notes, bonds and foreign markets," he said.

Chutipon Auschavara-nondha, senior vice president and head of the strategic planning department at SVE Asset, said the SEC did not allow asset-management companies to invest directly in commodities, but they could invest via foreign mutual funds.

"If Afet would like to increase liquidity in the market, it should firstly increase the type of 'venture investors' because this kind of investor can really take advantage by locking in risk, such as farmers, other people who conduct agricultural business and exporters.

"But the problem is that these people don't know much about investment, therefore they need to be better educated [about the exchange] and, after the market volume increases, this kind of investor will automatically run into the market," said Chutipon.