“Pakorn” Shares His Views on the Thai Capital Market During/Post Covid-19 Crisis

Dr. Pakorn Peetathawatchai, President of the Stock Exchange of Thailand (SET), shared his perspective on Thailand’s capital market during the coronavirus pandemic on Invest Asean 2020: Captains Speak, held by Maybank Kim Eng on July 21, 2020.

 

In the seminar, Dr. Pakorn stated that after the COVID-19 outbreak, each industry group recovered at a different pace. If considered from the date of the first case of COVID-19 infection confirmed in Thailand on 31 January 2020 (base) compared to the present (13 July 2020), the data showed that Consumer Products industry recovered the fastest and also exceeded the pre-COVID-19 level, accounting for 107.81%, while the Financials saw the slowest recovery of only 74.7%.

Meanwhile, the SET Index structure has changed as the Services industry has increased its weight on the index to 26% in 2020 (up from 11% in 2010) while the Financials industry has decreased from 22% to 13%. Retail investors play a more important role in driving the market from 33.72% in 2019 to 42.92% during 1H20.

 

In the post-crisis, Dr. Pakorn expected industry groups that will potentially play a role in driving the Thai economy as the Agro and Food industry comes first, followed by Healthcare, including Tourism, although the recovery from the coronavirus situation may gradually continue as the industry heavily relies on foreign tourists.

 

During the coronavirus crisis, the Stock Exchange of Thailand also developed and adjusted its strategies to support the ongoing market as follows;

1) Providing more services on digital platforms,

2) Developing comprehensive products, with a wide variety and increase alternatives for investors,

3) Modifying regulations to allow and attract new investors, such as adjusting the criteria to reduce market fluctuations, changing Ceiling / Floor to +/- 15%, adjusting the Short Selling Criteria. Recently, it is discussing with the Bank of Thailand with aims to allow foreign companies to raise funds in US dollars,

4) Promoting listed companies to oversee risks in accordance with the ESG (Environmental, Social and Governance) mechanism in order to be internationally recognized.

 

Dr. Pakorn pointed out that Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) would play a great role for corporates in investors’ eyes. Companies with good CSR and ESG showed that they have good management skills and would lead to a trust-building, giving advantage of the fundraising over companies without CSR or ESG.

 

For the remaining of 2020, Dr. Pakorn stated that there are over 30 IPO in a pipeline, while the prior debuted IPO such as Central Retail (CRC) and Sri Trang Gloves (STGT) were outstanding. These IPOs would contribute in raising SET’s market capitalization to the target of 30 trillion baht, as planned before, though would be delayed due to the crisis.

 

Dr. Pakorn affirmed that the Thai stock market’s price to earnings (P/E) was higher than regional peers due to the earnings adjustment during the coronavirus crisis and the spike in share prices from decade lows in March, causing P/E to expand. Despite high or low P/E, Dr. Pakorn said that there would be businesses with a fast rebound and those with a slow rebound. Thus, he advised investors to digest information and read the analysis carefully.

 

As for his opinion the dividend suspension of commercial banks in Thailand, Dr. Pakorn said that he thought the move was prudent and cautious as liquidity risk was a threat to corporates, which led to the decision of the Bank of Thailand to prepare Thai banks to withstand any upcoming situations that could happen to the real sector or the banks themselves.

 

Lastly, when asked whether he had plans to take the Stock Exchange of Thailand into the Thai stock market, Dr. Pakorn said that the plan was scrapped last year due to Thai laws for SET to become an infrastructure for Thai capital market, and said that there were no plans “soon” for SET to be listed in its own stock exchange.