.jpg)
At The Stock Exchange of Thailand (SET)’s seminar (Mar. 25), Surviving Intensifying Global Capital Market Competition, participants explored a range of strategies, such as demutualization, creation of more product variety and the exploitation of niche markets, to support the Thai capital market in an era of fierce global pressure. A key discussion, entitled A New Chapter for Thai Exchange and Security Industry in the Global Competition, brought together Trinities Securities Co., Ltd. Chairman Pakhawat Kovitwattanapong, Phatra Securities PCL Director and Chairman Banyong Pongpanich, Securities and Exchange Commission Assistant Secretary General Tipsuda Thavaramara and SET Research Institute Executive Director Kobsak Pootrakool, who acted as moderator.
There is still room for the Thai market to create more product variety and tap niche markets. For example, the repurchase market can support bonds and both futures and options have good prospects, Mr. Pakhawat said.
It is possible to introduce products which are currently available overseas, such as transferable custody receipts and sectoral exchange-traded funds. In addition, gold, oil and steel derivatives are also attractive and, as Thailand is a rice and rubber producer, there are opportunities for instruments based on these commodities. Concerning post-demutualization restructuring, there must be a clear separation of units responsible for market development and education, Mr. Pakhawat added.
A good capital market should be low-cost and stable. If the market does not increase both the quantity and variety of institutional investors and supply, it will become expensive and uncompetitive, Mr. Banyong said.
“Demutualization is necessary and must be done quickly. If the bourse does not improve efficiency, it will lose out completely or become a very minor player. The process of demutualization must be managed properly, meaning that the main drivers should not be SET, other self-interested parties or politicians. The key is to ensure that the process serves stakeholders,” Mr. Banyong declared.
The process should begin with knowledge building, e.g., a study of all related rules and regulations, followed by an easily-understood market development plan which involves all related parties, Mr. Banyong concluded.
There are some legal impediments holding the market back, such as the rules that limit investment channels and the number of brokers. The main problem areas are attitudes towards competition, risk-taking and foreign investors, plus a lack of urgency. Consequently, there must be an attitudinal change and an increased sense of urgency, Ms. Tipsuda explained.
“Demutualization and listing the Exchange are essential to increasing value and competitiveness. Reform alone is insufficient as it does not ensure efficiency. In the meantime, adjustments to the competitive environment must include demutualization, which will force an exclusive and privileged group to abandon their special benefits in return for ownership. SET can still maintain good governance as a listed company,” Ms. Tipsuda concluded.
