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SET Strives to Become an Inclusive Capital Market

SET Strives to Become an Inclusive Capital Market

The Stock Exchange of Thailand (SET) has outlined three key strategies aimed at promoting sustainable growth within the Thai capital market, especially in light of challenging global financial conditions and political uncertainties, with the goal of evolving into an inclusive capital market.

During the “Thailand Focus 2024: Adapting to a Changing World” seminar, SET chairman Kitipong Urapeepatanapong emphasized that the three strategic pillars are enhancing reliability and trust, improving the capabilities of the Thai capital market, and fostering sustainability.

To achieve these objectives, SET has teamed up with FTSE Russell, a subsidiary of the London Stock Exchange Group, to evaluate the environmental, social, and governance (ESG) standards of listed Thai companies, while also assisting in the development of new ESG-centric products and supporting family businesses, which represent 67% of the country’s listed firms.

So far this year, retail investors have made a net purchase of 122.4 billion baht on the SET, followed by local institutional investors. In contrast, foreign investors recorded a net sell of 124.6 billion baht, along with brokers selling 2.61 billion baht.

“Foreign investors remain interested in and closely monitor changes in Thailand, the implementation of existing policies, and upcoming economic development plans, which are crucial for investment and growth in Thailand and its capital market,” stated SET president Pakorn Peetathawatchai.

Lyndon Chao, managing director of the Asia Securities Industry and Financial Markets Association (ASIFMA), remarked that the Thai capital market has demonstrated adaptability, even after being impacted significantly by the COVID-19 pandemic and subsequent supply chain disruptions.

The challenges faced by the Thai market included reduced liquidity, a tight credit environment, a significant drop in stock prices, and shifts in government. Moreover, lower disposable incomes and declining investor confidence in corporate governance have emerged as concerns. “For investors, instability in government should not equate to instability in policy,” he observed.

Despite these challenges, Thailand’s capital market holds a 37% share of the overall capital market within ASEAN and has the potential for further growth towards year-end, according to Mr. Chao. He suggested that Thailand could benefit from learning from case studies in other countries; for instance, the Japan Exchange Group advises firms to enhance governance to foster trust between companies and investors. Additionally, a well-designed pension reform program could attract more investors by offering diverse investment options along with tax incentives.

Pornanong Budsaratragoon, secretary-general of the Securities and Exchange Commission (SEC), stated that both the SEC and SET are focused on rebuilding confidence in the Thai capital market by rigorously enforcing regulations and improving oversight of stock trading practices, including measures against short selling and naked short selling. Starting September 2, dynamic price band measures will be put in place to stabilize stock price fluctuations and better protect investors.

“Evidence shows that retail investors are increasingly confident in the Thai market, leading to more purchases of Thai stocks following the implementation of new measures, as the political landscape also begins to stabilize,” Ms. Pornanong noted.

Regarding foreign investors, she added, “They consider numerous factors when deciding on investments in Thailand, particularly given the availability of alternative destinations. However, there is a noticeable trend of them selling fewer Thai stocks.”

The “Thailand Focus 2024: Adapting to a Changing World” event gathers government officials, business leaders, and executives from the financial and capital markets to exchange insights, build confidence, and connect investment opportunities with 178 institutional investors from 80 global institutions. This three-day event, concluding tomorrow, underscores the ongoing appeal of Thailand’s capital market to foreign investors.

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