- 5 months ago
Category
🗞
NewsTranscript
00:00What do you make of this run-up in the SET, 18% upside, I mean, despite the fact that,
00:06you know, the country is a net all importer?
00:08Well, actually, yeah, fundamentally, when we saw the run-up, we were at the high at around above plus 20%,
00:17basically because of the election results that we had earlier this year.
00:21I think that the market was hoping, has been hoping for Thailand to have a stable government that can implement
00:30actual policies.
00:32Feedback from investors, to me, always has always been that you have good policies, when is it going to happen?
00:37So I think the results of the election has buoyed market sentiment and the potential of Thailand rebounding, becoming a
00:48major force in terms of growth again.
00:51And that outweighs the fact that Thailand imports 80% of its fuel mainly from the Middle East. Is there
00:58risk to that?
00:59I think, well, basically, if you look at the actual numbers, on the oil side, crude side, 50% originally
01:06used to come from the Middle East, I think.
01:08And the government has been managing it very quickly to find other sources, find other reserves that can meet demand.
01:17So there's been no shortage so far in Thailand.
01:21On the electricity side, we've got good reserves, we've got great PPAs from Laos, hydroelectricity, renewables as well.
01:31So although the LNG price import has impacted or has potentially some impact in the future on electricity price as
01:39well,
01:39the government is also urging companies to ramp up production in the Gulf of Thailand to replace as well.
01:47So there's measures in place that that has buffered the impact directly so far.
01:53The base case for a lot of companies initially was oil to be at about $60 to $8 a barrel.
01:59Now in excess, Brent, in excess of $100. That must change, you know, the picture.
02:06It will have an impact. I think globally as well, as everyone has said,
02:10I think the higher energy costs will have an impact potentially on inflation, potentially on the cost of living.
02:17We've seen companies or at least retailers holding back price increases so far.
02:24So the economy or the population has sort of come together to try and work through this, at least in
02:32the short term.
02:32But if it continues to prolong for a long period of time, things may change.
02:38Is there too much optimism, especially among equity investors?
02:42We talk about the SAT up 18% year to date, third best performer in Asia.
02:47We had the S&P at a new record high overnight.
02:51I mean, how are we at a record high when we have an Iran war at day 55, Brent at
02:59102?
02:59How are we at record highs?
03:02I think they're still hopeful in terms of it's a balancing situation.
03:08In Thailand, at least from our perspective, from what we've seen,
03:13the interest inflow of funds coming from international money
03:17and also retail being more active because of it in Thailand
03:22still boils down to the fundamental issues of government being there,
03:26government handling the situation quite well.
03:30And maybe everyone's hoping that this will end soon.
03:33And in terms of international inflows, you're seeing a reversal
03:37because not too long ago we saw the worst exit of international funds,
03:42the worst since October 2024.
03:44What kind of reversal are we seeing?
03:46What kind of inflows are you seeing from international funds?
03:49Well, pre-Middle East situation, we saw almost 2 billion US dollars of inflow,
03:54of international inflow that came in.
03:56Now it's dropped back down to net around a billion US dollars.
04:01But it's been stable so far ever since the, I guess, the five weeks that have passed
04:08since the initial attacks that happened.
04:11So do you think that inflows will accelerate and what might be the catalyst for that?
04:18Ultimately, I think the world wants this war to come to an end as soon as possible
04:23and that we can go back to our normal lives.
04:26I assume that when you mention markets still being buoyed up and we see from our market perspective,
04:33the index has been shifting around close to 1,500 or 1,480 for the last two weeks now.
04:42It hasn't moved very far from that.
04:44So with the expectation, I think, of doing another run, hopefully, after the war has ended.
04:51Any measures that you're considering that could boost foreign investor sentiment?
04:56Because right now there's still, you know, you talked about how sentiment has returned somewhat,
05:01but not to the levels we saw before.
05:02Well, we'll continue with our programs.
05:04I think there's certain programs that we have started at the middle of last year.
05:09So the Jump Plus program that we launched mid-last year has now closed applications.
05:16It's basically the same as the Value Up program in Japan or in Korea, which has had a great outcome.
05:23We were expecting funding, or we asked for funding for around 50 to 100 companies.
05:29We now have 143 applicants.
05:31The next step of this program is to communicate the plans, the investments, the programs that each company has put
05:42in place
05:42to increase their value, increase their governance, increase their ESG efforts.
05:49So hopefully there'll be good news to communicate to the investor community going forward in the Q3, Q4.
05:57Right. So at the end of the year, what might we see if it does accelerate?
06:02What's the target anyways?
06:05It varies from company to company.
06:08So we've given quite a wide breadth of targets that they could look for.
06:13Ultimately, the bottom line is key.
06:16So we've seen companies like the Tisco Group, Financial Group.
06:20We've got PDT in the programs.
06:22We've got PDT Exploration and Production, Thai Airways in the program.
06:25So each of them have different parameters that they will be informing the market.
06:31Tisco Group, for example, is looking to maintain the ROE, the high ROE, already high ROE, in the next two
06:39to three years, as an example.
06:42Some people talk about concentration risk in the SET.
06:45If you take a look at the 18% gains that we've seen in the benchmark, a lot of it,
06:53in fact, the most part of it, is driven by just one stock, which is delta-tie.
06:58How much risk is there to that?
07:00It's something that concerns us, obviously.
07:04Obviously, I think it has some fundamental factors involved in this particular stock, especially on the free float, the real
07:13free float, that we've been talking to the company itself.
07:17We've been talking to the parent companies to see ways to enhance the liquidity of the stock so that it
07:23reflects real value.
07:25Last week, we imposed the cash requirement on the trading of the stock because we saw a run-up and
07:35a valuation or PE that is probably beyond reasonable, rational types of fundamentals.
07:47It's just to make sure that investors think a little bit, take a pause, and have a look at what
07:53the true valuation of the company should be.
07:58But despite that, the company has been growing as well.
08:01So the delta-thailand has been performing, at least on a financial basis, extremely well as well.
08:06So they've been growing.
08:07They've been investing.
08:08But not enough to justify the kind of valuations it has right now.
08:12Well, 150 times PE is tough to justify when you compare to other MAG-7 or even stocks around the
08:20world in similar sectors that are not growing their bottom line higher than delta-thailand, but having a lower PE
08:31ratio.
08:32From your understanding and from your perspective as the president of the ACT, how are you looking at the reason
08:39behind the attractiveness of delta-thailand to investors?
08:45I think in the past, obviously, there's investors who are traders.
08:52There's investors who are more long-term oriented.
08:56Delta-thailand, the way it fluctuates, is probably an interesting stock for traders to enter and exit at the right
09:04timings.
09:05And ultimately, I think investors look to capital markets or go into capital markets to hope to create wealth for
09:12themselves as well.
09:13So the delta stock in its run-up gives that attractiveness.
09:19But from our perspective, we need to take a balanced view.
09:23We want to protect investors as well.
09:25We don't want stocks to be manipulated as such.
09:30And so far, so good.
09:32Our surveillance team actively look at trading activities on all stocks across exchange.
09:38And delta-thailand has not seen concentration or any particular type of directional trading activities.
09:46It's very, quite widespread.
09:48Is there reason to question the fundamentals of the Thai stock market if gains have been driven by just one
09:57stock?
09:58It is.
09:59So we do, for example, we've introduced the cap-weighted indices for the SET50 and SET100 indices.
10:06So we're cap-weighting at 10% already.
10:09So those two indices obviously will show a better reflection of what the market performance really is.
10:17Would you do the same for the SET?
10:19I mean, put a cap to the weightage of a company?
10:22By the nature of it being a composite index, you can't, right?
10:26On an international standards basis, there's no cap-weight on composite index anywhere in the world.
10:31And so that's the difficult part.
10:34I think ultimately we want the free float to go up higher.
10:39And the company has been working hard to do that as well.
10:42They did a block trade by the major shareholders early on this year.
10:48They've issued an exchangeable bond that could be conversing in the near future as well.
10:55So if we can help increase the free float of the company, I think things will work itself out in
11:03the right manner.
11:04It does seem like retail investors and domestic investors have driven the rally in the Thai stock market.
11:12Is there reason to be concerned about that?
11:15I think it's not just the retail investors.
11:18I think in Thailand, one of the attractiveness of the Thai market has been the balanced participation across the different
11:25types of investors.
11:26So if we look at the trading volume, which has picked up significantly this year,
11:31we're averaging at least the month or two in the past has been about $2 billion a day,
11:36which is probably the highest in the ASEAN exchanges.
11:4050% continues to be international investors.
11:4430% to 40% or 35% are retail, and the remainder are local institutions as well.
11:51So it's always been maintained that sort of balanced range of investor participation.
11:56And I think it's one of the attractiveness of the Thai market.
11:59Is that the ratio you would like to see?
12:01I mean, is that the ratio that you're comfortable with?
12:03Well, we don't have any specific targets in mind as such.
12:08Obviously, we let the market perform and act on its own in its right manner.
12:15We let the market work itself.
12:18We see other markets with higher retail participation.
12:21We see other markets with lower retail participation.
12:24I think as long as behavioral perspective from all investors involved is good, we're happy with that.
12:35Speculative gold trading has been such a thing in Thailand, and the regulators are climbing down on it.
12:41But some suggest that perhaps that move would actually benefit the Thai stock market.
12:47Do you see that happening, that rotation from speculative gold trading to Thai stocks?
12:54We do see some switches, but from a stock exchange of Thailand perspective, we have the Thai futures exchange as
13:03well.
13:03So we have gold online futures trading on our market there, and the contracts have been quite high in terms
13:10of volume as well.
13:11We'll be introducing next month, hopefully, what's called a mini gold online.
13:17I think the original gold online contracts are 10 ounces of contracts, so with the price run up, it's been
13:23quite expensive for people to enter the market.
13:25So we're introducing one ounce contracts as well.
13:29Do you expect a lot of demand from that?
13:32We're hoping so, obviously.
13:33I think part of introducing the new contract is because of that, there is demand for it,
13:39so that people can come into a trusted marketplace and participate in the volatility, obviously, of the gold price, hopefully
13:50in a constructive manner.
13:53Any targets that you've set?
13:55Well, so far, the Thai futures exchange, again, the volume has jumped significantly as well,
14:03in line with even more so than the Thai equity market.
14:08So our volumes have increased from around 400,000 contracts a day to now around 600,000 contracts a day.
14:17But we still want things to be higher.
14:20Kun Asadet, IPO, what's the pipeline looking like?
14:24The pipeline has been a difficult situation for Thailand.
14:28And I think it's been – because as we know, IPOs take time to develop, take years, or sometimes two
14:36or three years to develop.
14:37But you expressed optimism the last time you spoke.
14:39Where are you with that?
14:40We are with the renewed interest in the Thai market, the performance in the Thai market.
14:45I think, obviously, one of the main decision-making processes is valuation for issuers.
14:51And there has been a significant or relatively sizable pipeline of interest in the past.
14:59Now we're looking to see them converting into real action, into real filings, based on, hopefully, the higher valuation of
15:09the overall market today.
15:10We know that the SET and the SEC have already eased regulations for IPOs.
15:16But, you know, the take-up over the last several years have not really been – is there a sense
15:22or are there plans to perhaps implement more measures for it to be more attractive?
15:28Well, one of the things – we've been working with the SEC quite closely on this.
15:32So, things like timing, things like speed of ease of filings and entering the market is something that we're working
15:39together to try and balance the right disclosure level as well as the speed of processing.
15:48Another area that we've been looking to drive – obviously, Thailand needs new products as well.
15:55One of the things, as you mentioned before, it's – we're quite an old industry index, right?
16:00So, one of the things that we're looking to do, or we've been working with the Board of Investment, one
16:06of the bright spots in Thailand last year was the investment application, FDI application, of almost 60 billion U.S.
16:13dollars that are looking to be invested in areas of semiconductor, of EVs, of some health care as well, and
16:23data centers.
16:24So, we're working with the BOI to see if those companies that are investing in Thailand could look to tap
16:30the Thai capital market or use the Thai capital market to their advantage.
16:35And I know that your chairman has talked about possibly getting alcoholic beverage companies to IPO as well.
16:42Any entries expressed so far?
16:43Where are you with that plan?
16:46It's always been the case where our regulation says that anything that's legal can be listed on the stock exchange
16:54in Thailand, right?
16:55So, we're completely open to any listings of legal businesses.
17:01And there's been an interest expressed so far?
17:03There's been initial discussions, but I think it will take a bit of time.
17:11The Thai market needs to swallow or at least to have a better understanding between legality as well as sort
17:20of philosophy, I guess.
17:21We'll keep track of that space.
17:23Thank you so much for that.
17:25Asad Kongsiri, president at the stock exchange.
Comments