The Stock Exchange of Thailand (SET) has chosen One Asset Management, backed up by a team comprised of KGI Securities, Kim Eng Securities, Bualuang Securities, Thanachart Securities, Citicorp Securities and Samsung Investment Trust Management, to set up and manage Thailand’s first equity ETF (exchange-traded fund). An MOU between SET and consortium was signed today.
“An ETF is an attractive innovation for the Thai capital market, assisting institutional investors in managing their portfolios, and should be an easy-to-trade investment alternative for retail investors. This is all part of SET’s push to develop an integrated market providing a comprehensive and responsive range of products w/in three years,” SET President Ms. Patareeya Benjapolchai said.
“This ETF will be successful provided the consortium has a thorough understanding about the product, a robust marketing plan and distribution network, liquidity enhancement capability, and the commitment to make it a success. Consortium’s comprehensive and detailed plan, together with their ability to handle a range of questions, demonstrates their capacity to make this a success,” SET Senior Vice President Dr. Sethaput Suthiwart-narueput said.
A working committee with representatives from SET and Thailand Securities Depository Co., Ltd. assessed applicants against a range of criteria indicated in the request for proposals sent out in December 2006. The committee carefully studied each team’s proposals and provided an opportunity for the candidates to fully discuss their submissions.
Managing Director of One Asset Management, Dr. Somjin Sornpaisarn, underscored his company’s expertise and experience in the Thai market, particularly in liquidity provision and retail investor marketing.
“We have a strong and experienced team: KGI Securities, Kim Eng Securities, Bualuang Securities, Thanachart Securities, Citicorp Securities - and Samsung Investment Trust Management, which has been very successful in the Korean ETF market.
“The fund will be worth THB 1.9 billion at its initial public offering (IPO), of which One Asset Management and KGI Securities will contribute THB 900 million. The marketing budget during IPO is about THB 6 million, and it is expected that the fund will grow a total of 30-50% over three years,” Dr.Somjin added.
“KGI Securities is confident that we will be an efficient market maker. We have a clear plan, traders and systems in place. KGI Securities committed to enhance liquidity with the tight bid-ask spread at only one basis point of “indicative NAV” (net asset value), and hence should promote ETF’s liquidity. Moreover, KGI Securities has contributed to the liquidity of SET50 Index Futures, by currently acting as the market maker with largest market share (20%) in Thailand Futures Exchange,” KGI Securities (Thailand) President Mr. William Fang declared.
“Retail investors are essential for an initial stage of an ETF, and Kim Eng is confident that we are strong in that area. Presently Kim Eng Securities and the other team members hold more than 20% market share in terms of stock trading. Initially the ETF will have 60 – 70% retail participation, and we expect institutional investors to increase later,” Chief Executive Office of Kim Eng Securities (Thailand) Mr. Montree Sornpaisarn said.
The next step is to set up a task force to push this project further, including regulatory changes and system developments. The team will draw members from the Securities and Exchange Commission (SEC), SET and Consortium.
