[Reuters]

Published date: 19th Mar 2002

19 March 2002

Reuters News

English

(c) 2002 Reuters Limited

BANGKOK, March 19 (Reuters) – The head of Thailand’s stock exchange, one of the best performers in Asia so far this year, said on Tuesday he expected market capitalisation to rise 50 percent thanks to new issues and higher share prices.

Stock Exchange of Thailand (SET) President Kittiratt Na Ranong forecast the value of the bourse’s stocks would increase to three trillion baht ($69.06 billion) by the end of 2002, from around two trillion at the beginning of this year.

He told Reuters in an interview two trillion baht – just two percent of Hong Kong’s market capitalisation – was far too small for Thailand’s emerging economy of 63 million people.

“I’d like to see three trillion (baht) this year,” said Kittiratt, who took up his post, which involves promoting the Thai market to investors, on September 10 last year.

“Price is one thing, new listings is another, and capital increase is another. I’d like to see an increase in all
three.”

ATTRACT FOREIGN INVESTORS

Boosting capitalisation could make the Thai market more attractive to local and foreign Investors, giving firms easier access to much needed capital for investment.

The 1997-98 Asian economic crisis, sparked by Thailand’s baht devaluation, wiped around 60 percent off Thai equity market capitalisation in dollar terms.

Thai stocks, which used to account for 10 percent of total Asian equity trading outside Japan, slumped and have been in the doldrums until this year.

But with the government starting to sell shares in state-owned firms to the public, the Thai market is showing signs of perking up.

The initial public offering (IPO) of state-owned oil and gas firm PTT last November was oversubscribed five times.

This year, the government plans to cash in on IPO fever by listing seven state enterprises, Including a telecoms firm formed by the merger of the Telecommunication Authority of Thailand and the Communications Authority of Thailand.

Analysts say the new listings will have a combined market capitalisation of at least 380 billion baht ($8.79 billion).

Many brokerages believe the IPOs, rising company earnings and a global economic recovery will combine to push the market’s main index up to 450 points by the end of this year – heights not seen since mid-1999, but still far off a 1789-point peak in 1994.

ENRON CASES?

By 0736 GMT, the benchmark Stock Exchange of Thailand composite index stood at 374.35 points, almost unchanged on the day, but up 23 percent this year,

In the first two months of this year, foreign funds flowed into Thal firms, regarded as massively undervalued at a time when many other markets were seen fully recovered from the September 11 attacks on the United States.

Kittiratt said foreign investors, now accounting for 35 percent of investment in the Thai market, would be increasingly drawn to Thai firms because management standards were improving.

Thai executives had learnt the lessons of 1997, when many bankrupt firms were found employing dubious business and accounting practices.

“Do we have Enron cases hiding on the shelf? I don’t know, but we did have before and it helped us,” he said, drawing parallels between collapsed Thai firms and the bankrupt U.S. energy giant accused of accountancy malpractice.

“The percentage of bad guys I don’t believe is higher than in other countries,” he said.

He said state-owned firms would take a long time to reform. Selling shares to the public was a good start in forcing changes in management and improving efficiency, but would not bring wholesale changes overnight, Kittiratt said.

There was still much resistance from vested interests, unions and the public to selling state assets.

“Thailand is still the best in Southeast Asia in many aspects, but there are some angles politicians and decision makers wouldn’t want to touch,” Kittiratt said.

($1 = 43.44 baht).