As he prepares to step down at the end of this month as president of the Stock Exchange of Thailand, Charamporn Jotikasthira has outlined a broad range of goals for the bourse in the future.
The SET should seek to build the stability and integrity of spot commodity markets, stabilise agriculture prices, improve the transparency of and access to bond markets, create liquidity in key financial products, and expand the market’s coverage through partnerships with global exchanges, he said.
Charamporn, who became SET president on June 1, 2010, and will step down on May 31, said it would depend on circumstances and the vision of his successor how these new goals would be prioritised. But he believes that creating liquidity-provisioning mechanisms in key financial products and improving the effectiveness of market makers, especially in the derivatives market, are the best places to start.
Market makers in many products have not reached their full potential yet, he said. “Market makers have to be effective or else they will become a bottleneck to the improvement of the SET.”
Another of Charamporn’s suggestions is to attract foreign firms to list on the SET. This would not only benefit those companies but would boost the SET’s market capitalisation to levels more competitive with others in this region.
He believes these initiatives should be part of a five-year plan put in place by the new SET president.
Charamporn, 57, said that in the four years since he became president of the bourse, he had achieved the goals of the SET board – and his own – to make it a regional capital market.
This has entailed five objectives: expanding the retail investor base; developing new business in the market, especially derivatives and community markets; growing market capitalisation; upgrading the market’s infrastructure for growth; and driving quality development of stakeholders and investors for sustainable long-term growth.
For the first objective, Charamporn said the number of retail investors had risen by 73 per cent during his tenure, from 561,318 accounts in 2009 to 974,851 as of the end of last year.
He said he had also succeeded in developing new business for the market with community market trading such as gold futures, single stock futures, and derivatives products. The single stock futures fund grew from 600 contracts in 2009 to 34,351 last year. The daily trading of derivative warrants also increased threefold from Bt282 million a day in 2012 to Bt1 billion a day in 2013.
Market capitalisation has also grown. Last year, the SET saw a record number of initial public offerings – and a regional high – worth Bt354.9 billion, up 198 per cent from Bt118.76 billion in 2012. Market capitalisation has increased by an average of 78 per cent a year since 2009 with new vehicles to drive it such as foreign and infrastructure funds, he said.
As a result, the SET’s market capitalisation rose to US$354 billion (Bt11.4 trillion) last year, up 27 per cent from $278 billion in 2009. It now is the third-ranking capital market in Asean after the Singapore Exchange, which reached US$700 billion last year, and Bursa Malaysia with $500 billion.
Charamporn said the SET’s infrastructure had also improved to meet international standards, from maximum capacity of 3 million orders per day in 2009 to 14 million per day now. It can also serve multi-currency and multi-market products.
He said the bourse would today open a system for derivatives trading and clearing that would support the market value rising by as much as 10 times from the current level.
As for the objective of quality development of stakeholders for sustainable growth, the SET has striven to provide knowledge to relevant parties including listed companies, intermediaries and investors.
He said he had also been concerned with building the bourse’s potential for sustainable long-term growth in its financial results, increasing the ratio of stable revenue to fixed expenses. Last year, that ratio was 97 per cent, compared with 75 per cent in 2009.
In 2013, the SET posted net profit of Bt1.4 billion, or return on equity of 24.8 per cent.
“If the SET is like a boat, I believe that this boat is strong enough to voyage towards the goals for the new president,” he said.
When asked what he will do after May 31, he said he would continue to work but declined to disclose any details.
Stock Exchange of Thailand president Charamporn Jotikasthira during his four-year term.
Issue 2009 2013 % change
1. Total investors (accounts) 561,318 974,851 73.66
2. Market capitalisation from IPOs (Bt:bn) 35.68 354.9 894.67
3. Total market capitalisation (US$:bn) 278 354 27
4. Reduced cost-to-income ratio (%) 85 57 -
Source: Stock Exchange of Thailand