Thai Capital Market 50 Years: Past, Present & Future | Hoonsmart

Thai capital Market’s 50-Year Evolution: Charting a Course for Sustainable Growth

Thailand’s capital market marks a significant milestone, celebrating 50 years of growth and adaptation. Deputy Prime Minister and Minister of Finance, Pichai Choonwachira, underscored the Stock Exchange of Thailand’s (SET) pivotal role as a cornerstone of the nation’s economy since its inception in 1975. From a modest beginning with just eight registered companies, the SET has expanded to over 800 listings by 2025, facilitating fundraising exceeding 6 trillion baht for entrepreneurs seeking growth capital.

Key Initiatives driving Growth and Stability

The focus is on fostering unity and intent to further develop the Thai capital market. Asset emphasized the importance of providing accessible details and knowledge for investors to make informed decisions. This includes enabling both established and emerging companies to secure appropriate funding, thereby strengthening their businesses and contributing to economic expansion. Key initiatives are underway to adapt to global innovation changes, ensuring the sustainability of the Stock Exchange of Thailand and safeguarding small investors.

Enhancing Trust and Confidence

Restoring trust and confidence is a critical mission. Key duties include promoting fundraising, developing investment products, enhancing organizational infrastructure to facilitate investment, and streamlining regulations that impede growth. Pichai emphasized that these efforts aim to diversify investment opportunities, empower the public with sufficient information for informed decisions, and ensure sustainable long-term returns.

Lessons From Market Leaders: Stability and Strong Governance

A seminar titled “Look at the Past, Creating the Thai Corporate Governance” featured insights from three generations of capital market leaders. These leaders shared invaluable lessons and experiences in navigating the complexities of the Thai capital markets. Discussions centered on maintaining stability, ensuring sustainability, and fostering strong governance amidst evolving economic landscapes.

Leaders in Thai corporate governance share insights on market stability. Photo: Hoonsmart.com

Pillars of a Stable System

Dr. Chaiwat Wibunsawat, Chairman of the Stock Exchange of Thailand (2015-2023), highlighted the importance of a “stable system layout”. This system helps to support future fluctuations, emphasizing two critical components:

1. Development Finnet: An infrastructure system designed to streamline transactions between investors and securities companies, enhancing efficiency and mitigating systemic risks.
2. Risk Management: A collaborative effort between the Stock Exchange of Thailand, the SEC, and the Bank of Thailand to connect information, analyze risks, and prevent crises, such as debt defaults, thereby safeguarding the debt market system’s integrity.

Furthermore, driving sustainability via international standards like the DJSI (Dow Jones Sustainability Indices) increased participation from just two companies (PTT and SCG) to over 20, showcasing a commitment to sustainable development within the Thai capital market.

Did You Know? the Dow Jones Sustainability indices (DJSI) evaluate companies based on economic, environmental, and social criteria. As of 2024, only a select few Thai companies meet these stringent standards, showcasing the potential for growth in sustainable practices.

Adapting to the Digital Age

Dr. Prasarn Triratworakul,Chairman of the Stock Exchange of Thailand (2021-2014),emphasized the integration of Legacy and Future initiatives,especially in accessing digital platforms. Key developments include the implementation of a new trading system powered by NASDAQ technology, the establishment of the Thai Digital Assets Exchange (TDX), E-Meeting Platform, Live Platform, Live Exchange, ESG Academy, and ESG Data Platform.

The Live Platform is designed to provide opportunities for small businesses and startups interested in financial markets. It has grown to include over 3,000 members and several participating companies. dr. Prasarn believes the future capital market should embrace innovative formats suitable for diverse businesses, drawing inspiration from the ingenuity that established stock markets over the past 200 years.

Pro Tip: Small businesses can leverage digital platforms like the live Exchange to gain visibility, attract investors, and navigate the complexities of fundraising in the modern financial landscape.

Addressing Market Challenges: More and Stark Cases

Dr. Prasarn highlighted the establishment of the SEC and the Securities Act in 1992 as a pivotal Legacy in the Thai capital market.he addressed challenges such as the “More” and “Stark” cases, which underscore the need for robust oversight and governance.

• More Case: Involved individuals attempting to manipulate shares and defraud brokers by exploiting cash accounts with minimal collateral. The payment system, which is the heart of the stock market, prevented a systemic failure.
• Stark Case: Highlighted the necessity of a strong system for auditors, accountants, and the Board of Directors, emphasizing the importance of honesty among Audit Committees, Financial Advisors (FA), and Investment Bankers (IB).

These cases serve as “Black Swan” events, emphasizing the need for vigilance and proactive measures. Solutions include adding warnings, utilizing AI to analyze financial ratios, enhancing corporate governance, and pursuing legal action through mechanisms like Class Action lawsuits.

Creating the Future: Km-Products-Information-Technology

Special Professor Kitipong Urai Phatthanaphong, President of the current stock Exchange of Thailand Committee, emphasized the importance of creating trust and confidence in the Thai capital market. The focus is on amending laws to ensure legal enforcement and collaborating with relevant agencies.

Additionally, initiatives such as the Thailand Individual Saving Account (TISA) are being promoted to encourage long-term stock investments. The integration of AI technology in research and the establishment of a thorough database for investor decision-making are also key priorities.

If these things are driven successfully,Future Thailand will see new opportunities.

Reflections for the New Generation: “SET next 50”

representatives of the new generation are envisioning the future of the Thai capital market under the theme “SET Next 50,” focusing on the next half-century.

Helping People SET the Future

Dr. Santi Than Sathien Thai, a strategist and Monetary Policy Committee expert at the Bank of Thailand, noted that future challenges will intensify due to trade wars, technological advancements, and Thailand’s aging society. Investment remains crucial for generating future revenue, and the Stock Exchange is essential as a bridge to future business investments, trust and equity culture to protect small investors, and access to low-cost opportunities.

Rethinking the Boundaries of the thai Capital Market

Dr. Charika Charnnantapiphat from the Thailand Development Research Institute (TDRI) emphasized that the Thai capital market must evolve beyond its original framework to address global changes. Key areas for review include:

1. Accountability: Businesses must be accountable for their entire value chain, including human rights and natural resources.
2. Materiality: Environmental and social issues should be considered as capital variables and future risks.
3. Financing: Capital funds should be directed towards initiatives that drive real change and reflect core values.
4. Skills: The market needs professionals with expertise in ESG (Environmental, Social, and Governance) factors.
5. Data & Standards: Information must be comprehensive, pointing to how world changes affects financial and sustainability aspects.

The Stock Exchange must be more than a market provider; it must be an infrastructure that designs a new system. By expanding duty deeper and wider, prioritizing value creation, enhancing skills, and providing decision-making information, the Thai capital market can lead global trends.

From Inform to Inspire

Nakarin Wanakitpaibun, Chief Executive Officer of The Standard, emphasized the need to build confidence among new investors and businesses. Key elements include:

1. Trust: Transparency with tangible information.
2. Participation: Engagement and involvement from all stakeholders.
3. Market for All: Creating a sense of inclusivity within the capital market.

The main market will have to do more than inform and must also spark (Inspire) and participation.

How can the Thai capital market better adapt to the needs of new investors?

What steps can be taken to enhance transparency and trust in the Thai capital market?

The Evergreen Insights

The Thai capital market, like any financial ecosystem, is subject to constant evolution. Long-term success depends on several key factors:

• Adaptability: Markets must quickly adapt to new technologies, regulations, and global trends.
• Investor Education: Engaged and informed investors make for a healthier and more resilient market.
• Regulatory Oversight: Strong regulations and enforcement are crucial for preventing fraud and maintaining market integrity.
• Sustainable Practices: Aligning financial goals with ESG principles is increasingly important for long-term value creation.
• Innovation: Continued innovation in financial products and services ensures the market remains competitive and attractive.

Frequently Asked Questions

• How has the Thai capital market evolved over the past 50 years?

  The Thai capital market has transformed from a small entity with 8 companies to a significant financial hub with over 800 listings, facilitating trillions in fundraising and embracing digital change.

• What are the biggest challenges that the thai capital market currently faces?

  Present challenges include ensuring system stability, adapting to technological advancements, regaining investor trust after incidents like the “More” and “Stark” cases, and promoting sustainable business practices.

• What steps are being taken to promote sustainability within the Thai capital market?

  The Thai capital market is promoting sustainability by encouraging companies to adopt international ESG standards,directing capital towards environmentally and socially responsible initiatives,and integrating sustainability considerations into financial analysis.

• What is the role of technology in the future of the Thai capital market?

  Technology will play a pivotal role through digital platforms, AI-driven analytics, and innovative trading systems which is helping to enhance accessibility, efficiency, innovation, and transparency.

• What are the main initiatives aimed at restoring investor confidence in the Thai stock market?

  Key initiatives include strengthening legal enforcement, promoting corporate governance, enhancing transparency, and increasing oversight to prevent fraud and manipulation.

• What is the Thailand Individual Saving account (TISA) and how does it support the capital market?

  TISA is a project designed to encourage Thai citizens to invest in long-term stocks, promoting financial security and deepening participation in the capital market.

Share yoru thoughts and questions in the comments below. How do you see the Thai capital market evolving in the next 50 years?

Based on teh provided south African National Treasury document concerning the Public Audit Act (PAA), here are two PAA-related questions framed in the context of the Thai Capital Market article:

Thai Capital Market 50 Years: A Journey through Time | Hoonsmart

The Thai Capital Market, a basic pillar of Thailand’s economic landscape, celebrates a notable milestone: 50 years of evolution, growth, and resilience. This article, brought to you by Hoonsmart, delves into the past, present, and future of the Stock Exchange of Thailand (SET) and its profound impact on the nation’s financial prosperity. We explore the key milestones, challenges overcome, and future opportunities that lie ahead for investors and stakeholders.

The Genesis: Thailand’s Early Capital Market (1970s-1980s)

The establishment of the Thai capital market in the 1970s marked a pivotal moment for the country’s economic development. Initially, the market was small, primarily focused on domestic companies. The early years were characterized by:

• Limited Infrastructure: Basic trading systems and regulatory frameworks.
• Smaller Market Capitalization: A relatively low overall value of listed companies.
• Early Investors: Primarily Thai individuals and a few institutional investors.

Despite these limitations, this era laid the foundation for future growth. The seeds of a vibrant capital market were sown, eventually attracting international investment and fostering economic expansion. Early pioneers navigated the complexities of regulatory environment including the Securities and Exchange Commission, Thailand (SEC) to help guide the market.

Key Events and Milestones:

• 1975: The inaugural year of the Stock Exchange of Thailand (SET).
• 1980s: Initial public offerings (IPOs) began to rise in popularity and number.

growth and Globalization: the Expansion of the Thai Capital Market (1990s-2010s)

The 1990s and 2000s witnessed significant growth and globalization. Thailand’s capital market attracted increased foreign investment, leading to market capitalization expansion. Technological advancements improved trading efficiency, leading to a more robust economy. However, the period wasn’t without its challenges.

The Asian Financial Crisis and Its Aftermath

The devastating Asian Financial Crisis of 1997-1998 exposed vulnerabilities within the Thai economy and its capital market. The crisis, triggered by currency devaluation and speculative attacks, led to a sharp decline in the market value of listed companies and investor confidence. However, the crisis also spurred crucial reforms:

• Enhanced Regulation: Stricter oversight to prevent future financial instability.
• Corporate Restructuring: Many companies restructured to improve their financial footing.
• Foreign Investment Boost: To stabilize the market, foreign investment was encouraged.

Key Developments During This Period:

• Market Liberalization: Opening up the market to foreign investors.
• Technological Upgrades: Introducing electronic trading systems.
• Product Diversification: Introducing derivatives and other financial instruments.

The Thai Capital Market today: Navigating the Present (2010s-2020s)

In the present, the Thai capital market has matured and evolved into a complex financial ecosystem, boasting a robust infrastructure, and sophisticated products. The SET has become a significant player in the Southeast Asian region. Key characteristics include:

• Diverse Investment Opportunities: Numerous listed companies across various sectors.
• Active Participation: Increased participation from both domestic and international investors.
• Advanced Technology: Modern trading platforms and market access.

Current Market Trends:

• Sustainability: Growing interest in Environmental, Social, and governance (ESG) investments.
• Digitalization: Increased use of online trading platforms and financial technology (FinTech).
• Investor Diversity: Growth in retail investor participation

The Thai capital market continues to show the value of Thailand’s growing economy.

The Future of the Thai Capital Market: Looking Ahead

The future of the Thai capital market holds immense promise, driven by several key factors including its positive investment climate, digital innovation, and sustainability initiatives. The growth of the market will depend on innovation and adaption to changing market dynamics.

Key Growth Areas and Opportunities:

• FinTech Integration: Further adoption of digital financial technologies.
• Enduring Finance: Focus on green bonds and ESG investments.
• Regional Integration: Strengthening financial linkages with other ASEAN member states.
• Talent Development: Emphasis on developing skilled financial professionals.

Potential Challenges:

• Global Economic Uncertainty: navigating volatile global markets.
• Geopolitical Risks: Addressing regional and global tensions.
• Technological Disruption: Adapting to rapid advancements in technology

Investment in Thailand: Practical Tips for Investors

Investing in the Thai Capital Market can be a rewarding endeavor with significant growth potential. Here are some practical tips:

• Conduct Thorough Research: Analyze market trends, individual companies, and economic forecasts. Consider the financial industry’s future and its prospects.
• Diversify Your Portfolio: Spread investments across different sectors and asset classes to mitigate risk.
• Stay Informed: Keep up to date with market news through trusted sources like Hoonsmart, SET’s official website, and financial news outlets.
• Consider Professional Advice: consult with financial advisors,especially during economic uncertainty.learn from financial professionals.
• Understand Regulatory Landscape: Be aware of the Thai capital market’s regulations and potential impacts of changes.

Table: Performance of the SET Index

Period	SET index Performance	Key Factors
1975-1990	Initial Growth Phase	Market establishment, increasing number of listed companies
1990-2000	Strong Growth (including Crisis)	Foreign investment, Asian Financial Crisis corrections
2000-2010	Recovery and Expansion	Economic recovery, global market influence
2010-2020	Moderate Gains	Digital growth, global economic conditions

Please note that past performance does not guarantee future results. It’s crucial to remain informed.