Cream of the crop to help attract foreigners
- Newspaper section: Business
KHAO YAI : Attracting global investors to a small stock market such as Thailand's could be easier if the Stock Exchange of Thailand succeeds in its ambition to create a basket of "Asean Stars" from markets across the region.
"The Asean Stars would be a gathering of large stocks listed on stock markets in Asean countries to promote as an Asean asset class. The bigger scale will be more attractive for investors who are interested in investing in the region," said Veerathai Santiprabhob, chief strategy officer for the Stock Exchange of Thailand (SET).With capital from weak economies in the US and Europe flowing into emerging Asia equity markets including Thailand, all markets need to adjust their strategies to tap the benefits from the influx as much as possible.
Asean Stars will be available for investors in the coming year through collaboration involving seven exchanges in six countries: Thailand, Malaysia, Indonesia, Singapore, the Philippines and the two Vietnamese exchanges in Hanoi and Ho Chi Minh City.
A total of 210 stocks would be available, with each exchange choosing 30 heavyweight companies to promote. These stocks in turn could be grouped into sub-categories such as an Asean bank index or an energy index to draw foreign investors.
"Every market has an equal right to present its own top picks to place in the cart," said Mr Veerathai.
The approach, he said, would give regional exchanges more ability to capture gains from capital inflows, while also offering investors risk management tools and more choices of products in the regional market.
Asean Stars is a part of the Asean Linkage scheme, which would allow investors in each participating market to buy shares in neighbouring markets through their local brokerages. As well, foreign investors will find it easier to explore all markets from one place.
Work is continuing to develop a linked trading platform, as well as post-trading or clearing and settlement.
The Thai and Malaysian bourses had planned to begin a pilot project in the first quarter of 2011, but now Singapore wants to join so a three-market link is now scheduled to be available by the fourth quarter of next year.
He said the delay could in fact be positive as it would give the SET more time to ensure a proper platform and fair service fees by brokerage firms.
"If brokers charge too much, we will allow the investors to make transactions through the SET directly. Also, this will reduce costs of medium-sized players," said Mr Veerathai.
While stronger regional links will be a plus, the Thai stock market also needs to develop itself more to ensure it remains competitive domestically, while local funds such as exchange-traded funds should be promoted to list on stock markets abroad.
"It is like the idea of alliances among airlines," said Mr Veerathai.
"The national carrier needs to compete with others but at the same time it has allied with some through Star Alliance. We want a linkage to expand our service coverage but we have to hold a grip on the domestic market too."
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