SET aims to double market cap by 2020

Part of the SET’s efforts to double market capitalisation include plans to upgrade gold trading.

The Stock Exchange of Thailand (SET) has set the ambitious goal of doubling market capitalisation to 30 trillion baht in 2020, says its president Kesara Manchusree.

The SET’s daily trading value stands at around 50 billion baht and its market capitalisation is 15 trillion.

The key strategy to achieve the goal is the diversification of its products and services and an upgrade of working processes to be done through electronics systems and online platforms.

Three years ago, the SET, which began operating on April 30, 1975, became the regional leader in terms of trade volume.

Mrs Kesara said the SET plans to increase both demand and supply of the exchange, coupled with supporting listed firms to improve their corporate governance to reach international standards.

“A way to make the market grow sustainably is to get our listed firms recommended by an international organisation, for example, the Dow Jones Sustainability Index (DJSI). The listed firms that joined the DJSI board will be on the world’s radar screen,” she said.

In terms of product variety, the SET plans to allow foreign companies to use the bourse for both primary and secondary listings, as well as add new products such as depository receipts, infrastructure funds, index options, and other innovative products through the Thailand Futures Exchange.

“It is essential to increase the number of our trading products in line with the rising pace of market trading value to balance our price-earnings ratio. If we let trading value grow alone, the P/E ratio will be very high for investors,” said Mrs Kesara.

Under the plan, the SET will provide core products including common stocks, real estate investment trusts, infrastructure fund unit trusts, depository receipts, derivatives, exchange-traded funds and indices.

The SET also expects to make initial public offerings of around 250 billion baht and public offerings of about 130 billion this year.

The bourse projects that trading value on the SET will end the year at 52 billion baht per day, and trading on the futures exchange at 190,000 contracts per day, including new products that will be transferred from the Agricultural Futures Exchange of Thailand as a result of the merger of the two futures bourses.

The SET plans to upgrade gold trading with new, shorter contracts, while allowing physical gold to be delivered to investors.

“The new feature will offer more choices and serve demand for gold trading better than long-term contracts,” she said.

The SET currently plays an active role as a trading hub in the Greater Mekong Subregion.

Mrs Kesara said that the SET is expected to double its number of investors, with active accounts projected to reach 2.4 million in 2020, up from 1.2 million at present.

She said the SET also needs to focus on the stability of the market, with efforts being put forth to boost the proportion of institutional investors to 50% of total trading volume and cut retail investors to 50% from 60% currently.

Institutional investors are comprised of foreign investors, local institutions and proprietary trading. The SET’s ratio stand at 60% retail, 20% foreign investors, 10% proprietary and 10% local institutions.

The SET also have to diversify to become more competitive, said Mrs Kesara.

Other services the bourse plans apart from its core business include fund trading settlement to reduce the clearing and settlement period from three working days to two.

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