Last updated: December 23, 2013 2:05 pm

Thailand stock exchange in bid to attract foreign flows

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Thailand’s stock exchange plans to change its rules to allow foreign companies to list in Bangkok, in a move that would set it on course to become a southeast Asian trading hub challenging Singapore.

The development is a sign of how exchanges in the region are starting to compete as they outgrow their domestic markets and seek to capitalise on business from within the Association of Southeast Asian Nations.

The move comes after the Stock Exchange of Thailand attracted a record number of company listings this year and for the first time overtook SGX, the Singapore exchange, measured by average daily trading volume.

That makes the Thai operator the largest exchange in Asean by such a measure, according to figures from the World Federation of Exchanges.

The value of total share trading in the first 11 months of the year was $320bn on the SET, ahead of the SGX which notched up $265bn.

Bursa Malaysia came third with $138bn in average daily trading volume.

The push by the Thai exchange to attract overseas companies would initially focus on companies in the greater Mekong area, which neighbours Thailand and is made up of Vietnam, Cambodia, Laos and Myanmar.

“To become a key regional connector, [we] will focus on expanding businesses to Cambodia, Laos, Myanmar and Vietnam, as they have high growth potential and high need for funds,” the exchange said.

Chanitr Charnchainarong, executive vice-president in charge of listings at the SET, said the exchange would allow any foreign company to list under the new rules once approved, including those from China and Australia.

Mr Chanitr said the SET had in the past year attracted listings from Thai companies whose main business was in the Mekong region.

That included CK Power, a Thai company involved in hydroelectricity in Laos, which raised Bt2.34bn ($72m) in an initial public offering on the SET in July.

Mr Chanitr said that as part of a new, three-year plan starting in 2014 the exchange would start attracting companies from countries in the Mekong region as well. “We feel that Thai growth will probably stagnate one of these days. The expansion in our neighbouring countries is huge and they are growing at a much faster rate than us,” he said.

Cambodia and Laos have stock exchanges of their own while Vietnam has one each in Hanoi and Ho Chi Minh City. Myanmar has accepted assistance from the Japanese exchange to develop one.

The move by SET appears aimed at attracting companies that might prefer to list on an exchange with deeper liquidity, modern trading systems and proven corporate governance principles.

“We have the depth and breadth to be able to handle that and we hope that many of the state-owned companies and entrepreneurs that do joint ventures in our neighbouring countries would look to us as a venue for capital-raising,” Mr Chanitr said.

About 40 per cent of companies on SGX are of non-Singapore origin. Of this number, about 20 per cent are from southeast Asia.

Lawrence Wong, SGX’s head of listings, said the SGX was “the preferred listing platform of local and international companies with an Asian focus”.

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