The President of the SET, Mr. Kittiratt Na Ranong, disclosed, "The total trading volume in the SET for 2002 (up to December 18) amounted to THB 2,024,667.70 million. This is an increase from 2001 (THB 1,577,757.97 million) by THB 446,909.73 million or 28.32%. Daily average turnover amounted to THB 8,507.01 million which is believed to be higher than the daily average turnover in 2001. The increase is more than 30% from last year's daily turnover of THB 6,439.83 million.
The SET index closed on December 18, 2002 at 350.62, up from the year 2001 at 303.85. Total market value on December 18, 2002 was at THB 1.95 trillion, up from 2001 (THB 1.61 trillion) by 21.12%. Inclusive of the MAI, twenty-three new companies listed their shares, seventeen on the main board and six on the MAI. Before the end of this year, two more companies will list their shares bringing the total of newly listed companies to twenty-five, of which nineteen are on the main board and six in the MAI.
Despite the Thai stock market being affected by the continuous fall of the U.S stocks and the tense situation between the US and Iraq resulting in a fall in investors' interest in the latter half of the year, the total turnover for 2002 is still higher than targeted. This can be attributed to the government's stimulus measures, which had a positive flow-on effect on the financial markets. The improved economic situation and the earnings of listed companies also helped.
In the year 2002, the SET was attractive in terms of return on investment, as can be seen from the earnings of listed companies as of the third quarter of the year. Listed companies have a combined profit of THB 147,935 million, an increase from the same period last year by as much as 10%. The average dividend yield is up to 2.41%, up from 2.13% in 2001. This shows the Thai stock market is still attractive and has room for growth. The SET has used this opportunity to invite those with savings to invest in the stock market, with hopes of expanding the investor base in both the short- and long-term, through promotional activities in both Bangkok and the provinces. The SET has also prepared to offer knowledge and information through various media channels and set up organizations to help strengthen investor's level of understanding.
"The SET was not able to achieve its newly-listed company target because of the economic gloom in the latter half of the year, which forced companies to delay their share listing. Moreover, several state enterprises also delayed their privatization and share offering because of uncertainty in policy. However, many of these companies have already appointed financial advisors, a sign that they will likely list their shares in 2003," Mr. Kittiratt said.
Apart from this, the SET has also restructure itself to enhance efficiency in accordance with the goals and objectives of increasing investor base and listed companies, as well as developing the financial markets.
Increasing the Investor Base
The SET President said the SET has both short-term and long-term plans to increase the investor base. By October 30, 2002, 234,058 additional people opened accounts with the SET and 48,652 people traded on the SET. In the short-term, the SET organized activities to educate and advise the public about investment, both in Bangkok and in various provinces. These activities were broadcast via several media channels and reached about twelve million people. They included the SET in the City, the SET roadshow to the four regions, seminars on investment, the setting up a new subsidiary, the Family Know How Company Limited, to produce educational programs on finance and investment through non-academic means, and arranging activities to promote trading through the Internet.
"The SET tries to reach new targets through activities and various channels, for example, the youth football tournament "SETTRADE-AFC-U14-Festival 2002." The tournament was used to distribute knowledge about investment and it was found that more people accessed the SETTRADE website. The website had on average 15,719 hits per day, but after the tournament the figure jumped 24% to 19,538. The SET will continue to find new ways to present information to the public in an easy-to-understand method," Mr. Kittiratt said.
The SET has created the website www.settrade.com as its investment portal to enable investors to receive information in a complete and timely manner. More than 40,000 investors have used its services. This website is also the number 1 website in terms of page views among financial and investment websites, according to Web Thai's statistics accumulated by the National Electronic and Technology Center. The SET has also distributed handbooks on investment and held training courses both in classroom settings and through E-learning. The SET has also increase the number of personnel trained by the Thailand Securities Institute by more than two hundred so there are qualified personnel to serve investors.
In the long-term, the SET has organized a youth educational program through SET-JAT (SET Junior Achievement Thailand) and coordinated with the Department of Curriculum and Instruction Development under the Ministry of Education to develop a curriculum for elementary and high school students to assist them in learning how to manage their finances. The SET has also held training courses for students, university students, and teachers to instill knowledge about financial and money markets.
"The SET has created mechanisms that will support the creation of quality investors through the establishment of various organizations. These include the establishment of the 'Quality Service Association' in coordination with securities companies, to provide quality services especially for retail investors in the stock market.
'The Investor Relations Club? was set up to foster good relations between listed companies and investors. More than 148 companies have already joined as members. The organization has also held activities to boost understanding among listed companies about the importance of relations with investors. The SET has also supported the creation of the 'Investor Club' in conjunction with the Thai Investor Association to improve and protect investors. This organization will be an important engine for effectively increasing the investor base," Mr. Kittiratt said.
Increasing the Number of Listed Companies
The SET President explained, "The SET has set up the 'Capital Market Opportunity Center' to enhance the quality of listed companies and to increase their number on both the SET and the MAI. The organization has also worked with ten other organizations to set up a taskforce to find quality companies to list shares. The taskforce has targeted 190 companies and has given them advice on how to list shares and how to choose financial advisors. Fifty of these companies have already appointed their financial advisors. In the year 2002, twenty-three new companies listed their shares on the SET and the MAI, increasing the market value by THB40,000 million.
In terms of preparations for the privatization of state enterprises, the SET has planned training courses and provided advice to help the preparation of eleven state enterprises that are interested to list their shares and waiting for better situation.
For listed companies, the SET has dispensed advice to encourage the use of various financial tools to increase their liquidity. These include: stock splits, stock dividend, treasury stocks (nine listed companies bought back shares as of December 18, 2002), adjusting market-maker rules and regulations, and lowering the burden of listed companies through the relaxation of the rules and regulations. They include allowing listed companies to send their annual reports and shareholders' meetings invitations via CD-ROM and scrapping the rule that forbids dissemination of information for companies about to list shares.
The SET has supported listed companies undergoing debt restructuring to do so effectively and speedily in coordination with the Thai Asset Management Corporation (TAMC). About 5-6 companies are expected to overcome obstacles and finalize their debt-restructuring plans this year.
At the same time, the SET has supported increased investment in NVDR by drafting new regulations which allows foreign investors to include NVDRs in the Thailand Securities Depository Co.,Ltd. to be transferred into shares when enough foreign room is achieved. The shares must be deposited in the scripless system. The SET has also organized training courses for derivatives instruments, which includes improving regulations and preparing for this trade.
Enhancing the Efficiency of the Intrastructure of the Capital Markets
"In 2002 the SET has carried out important functions to enhance efficiency and lower costs for industries. They include supporting sub-brokers to become members of the SET. In 2002, nine sub-brokers were upgraded to brokerage status, bringing the total number of member firms to thirty-six.
The SET has also set a minimum commission fee at 0.25% from January 14, 2002. This move resulted in securities companies' earnings rising by 83 times from the previous year," Mr. Kittiratt said.
Developing the E-payment system and connecting it to the Online Banking system of commercial banks has allowed investors to receive greater convenience in subscribing to shares through banks and financial institutions. It has also lowered the duration of time needed to list shares to five days from when the share subscription started. Apart from this, the 'Front Office Service Bureau' was also created to lower Front Office Service costs for member companies. An organization to educate related individuals on information technology is being set up.
Apart from this, the SET has supported the implementation of a scripless system by expanding the securities deposit system to listed companies to increase the opportunity for investors to include their shares in the system. Currently, fifty-seven companies have signed up for this system. The Thailand Securities Depository also acts as the Service Bureau for Asset Management Funds to support the increased number of provident funds. By September 30, 2002 the company had already acted as registrar for five of the total of thirty-four provident funds in the market.
In developing the supervisory structure of the stock market, the SET has restructured its board of governors by inviting an increased number of distinguished experts from the financial sector, the investor sector, and the listed company sector to sit on the board. The SET has lowered representation by member companies to the board to ensure that the board truly works for the development of financial markets as a whole.
Promoting Good Governance
The SET supports good governance through the creation of the Corporate Governance Center and provides an advisory team to meet executives of listed companies to exchange information about establishing good governance systems for listed companies. The team has met with executives of eighty-three companies and has drafted guidelines to ensure good governance so that both member companies and listed companies can refer to them. It has also distributed this guidelines through radio and television programs, in CD-ROM, publications, and through its website, and has held activities to educate executives. 255 companies joined in the program, which is an about 66% of all listed companies.
"The most important factor in supporting good governance is recognizing it and providing incentives to support it. The SET has lowered the annual fees for three companies that received more than seven points in the good governance rating scheme. It has also provided financial support for training courses that has so far educated more than 50% of the executives of both listed and member companies on good governance courses. The SET will continue to support these type of activities in the future," Mr. Kittiratt said.