SET hopes plan to raise market cap will make it more competitive in Asean

The Stock Exchange of Thailand is hopeful that its plans to raise market capitalisation - including relaxation of listing rules - will make the exchange more competitive against Asean bourses.

The SET targets new listed companies' market cap this year to reach Bt120 billion, while existing listed companies are expected to raise at least Bt100 billion.

"This is to boost total market capitalisation to complete with other stock markets in Asean," SET president Charamporn Jotikasthira told a news conference yesterday.

The Thai exchange's market cap ranked fourth in the region at US$390 billion (Bt11.6 trillion) at the end of last year, following $765 billion in Singapore, $466 billion in Malaysia and $428 billion in Indonesia. In baht terms, the market capitalisation of the main board and the second-tier Market for Alternative Investment hit a Bt12-trillion record at the end of 2012, up 41 per cent from 2011.

To achieve the target, the Thai bourse is flexing its muscles to attract listings by holding companies. Under rules that took effect last September 1, Thai companies operating in neighbouring countries can seek a listing on the SET.

"We have relaxed the rules for holding firms to raise funds from the stock market. This will help them to tap low-cost capital to expand their businesses," Charamporn said.

In the first half of this year, 34 new stocks are expected, including property funds. Of the total, 14 filed applications in the last quarter of 2012, while 20 should apply in the current quarter.

Companies mobilised a total of Bt257.81 billion from the bourses, the highest in more than 10 years.

Aside from new supplies, the exchange also plans to increase demand. The number of new stock-trading accounts is expected to increase by 96,600 from 800,000 at the end of last year. Of the total, only 30 per cent were active, showing at least one transaction in the past three months. The SET also aims to boost the number of derivatives-trading accounts by 22,000.

At present, 58 per cent of transaction value comes from retail investors.

"We are concerned about the proportion of retail investors, as this exceeds 50 per cent of total transaction value. What we can do is to educate them on associated risks," Charamporn said.

He added that the number and quality of investors in the market would improve now that it was developing links with other stock markets in Asean.

"We will work closely with Greater mekong Subregion [countries] such as Myanmar, Vietnam and Laos."

He added that the Asean Linkage that started last year under the participation of the Thai, Singaporean and Malaysian stock markets was still generating low business volume and value compared with the SET's value. Yet he anticipates that this will improve in the long term when the linkage draws more institutional investors.

The next mission of SET is to improve listed companies' quality, to boost the number of Thai companies in the Dow Jones Sustainability Index. Only Siam Cement Group and PTT are included in the index currently. The exchange's Corporate Social Responsibility Institute is toughening rules.

The SET Index closed at 1,379.19 as of December 27, the highest in 16 years and 10 months, up 38 per cent from January 4, 2012. Average daily turnover in the year hit a new high at US$1.04 billion, beating $1.025 billion in Singapore.

"We believe that this year will be even better for both investors and listed companies," Charamporn said.