Stock Exchange of Thailand

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Stock Exchange of Thailand
Type Stock Exchange
Location Bangkok, Thailand
Coordinates 13°43′22″N 100°33′34″E / 13.72278°N 100.55944°E / 13.72278; 100.55944
Founded April 18, 1975 (1975-04-18)
Key people Charamporn Jotikasthira (President)
Currency THB
No. of listings 545(2011) [1]
Market cap BT฿ 8,490 billion (2011) [1]
Volume BT฿ 29.47 billion (2011) [1]
Indexes SET Index, SET50 Index and SET100 Index
Website www.set.or.th

The Stock Exchange of Thailand (SET, Thai: ตลาดหลักทรัพย์แห่งประเทศไทย) is the national stock exchange of Thailand. It is located in Bangkok. As of 31 December 2011, the Stock Exchange of Thailand had 545 listed companies with a combined market capitalization of BT฿ 8,490 billion.[1] The indices of the stock exchange are SET Index, SET50 Index and SET100 Index.

The index's all-time high level was 1,789 set in January 1994.[2]

History[edit]

The modern Thai capital market developed in two phases. The privately owned Bangkok Stock Exchange operated from 1962 to the early 1970s. The Second National Economic and Social Development Plan (1967-1971) established the Securities Exchange of Thailand to mobilize funds to support industrialization and economic development. This was the country's first officially sanctioned, supervised and regulated orderly securities market.

The Bangkok Stock Exchange[edit]

1961 Thailand implemented its first five-year National Economic and Social Development Plan to support the promotion of economic growth and stability and to develop the Kingdom's standard of living. The Thai stock market began in July 1962 when a private group established an organized stock exchange as a limited partnership. The group later became a limited company and changed its name to the "Bangkok Stock Exchange Co., Ltd." (BSE) in 1963.

Despite its well-intended foundation, the BSE was rather inactive. Annual turnover was only 160 million baht in 1968, and 114 million baht in 1969. Trading volumes continued to fall sharply thereafter to 46 million baht in 1970 and 28 million baht in 1971. The turnover in debentures reached 87 million baht in 1972, but stocks continued to perform poorly, with turnover hitting an all-time low of only 26 million baht. The BSE finally ceased operations in the early 1970s.

It is generally accepted that the BSE failed to succeed because of a lack of official government support and a limited investor understanding of the equity market.[citation needed]

The Stock Exchange of Thailand[edit]

Despite the failure of the BSE, the concept of an orderly, officially supported securities market in Thailand attracted considerable attention. The Second National Economic and Social Development Plan (1967-1971) proposed, for the first time, a plan for the establishment of such a market, with appropriate facilities and procedures for securities trading.

In 1969, as recommended by the World Bank, the government acquired the services of Professor Sidney M. Robbins from Columbia University to study the development channels of the Thai capital market. Professor Robbins had previously served as Chief Economist at the United States Securities and Exchange Commission. The same year proved an eventful one for the Thai capital market, as the Bank of Thailand also formed a Working Group on Capital Market Development, which was assigned the task of establishing the stock market. A year later, in 1970, Professor Robbins produced a comprehensive report entitled "A Capital Market in Thailand". This report became the master plan for the future development of the Thai capital market.

In 1972, the government took a further step in this direction by amending the "Announcement of the Executive Council No. 58 on the Control of Commercial Undertakings Affecting Public Safety and Welfare". The changes extended government control and regulation over the operations of finance and securities companies, which until then had operated fairly freely. Following these amendments, in May 1974, long-awaited legislation establishing "The Securities Exchange of Thailand" (SET) was enacted. This was followed by revisions to the Revenue Code at the end of the year, allowing the investment of savings in the capital market. By 1975, the basic legislative framework was in place and on April 30, 1975, "The Securities Exchange of Thailand" officially started trading. On January 1, 1991 its name was formally changed to "The Stock Exchange of Thailand" (SET).

Roles[edit]

Legislation establishing "The Securities Exchange of Thailand" (SET) was formally enacted in 1974 and the SET began trading on April 30, 1975. On January 1, 1991 "The Securities Exchange of Thailand" officially changed its name to "The Stock Exchange of Thailand" (SET).

As defined in the SEA (1992), the SET's primary roles are:

  • to serve as a center for the trading of listed securities, and to provide the essential systems needed to facilitate securities trading
  • to undertake any business relating to the Securities Exchange, such as a clearing house, securities depository center, securities registrar, or similar activities
  • to undertake any other business approved by the SEC.

Operations[edit]

The Stock Exchange of Thailand is a juristic entity set up under the Securities Exchange of Thailand Act, B.E. 2517 (1974). Operations started on April 30, 1975. It operates under the legal framework laid down in the Securities and Exchange Act, B.E. 2535 (1992).

Its mandate is to be a market or center for the trading of listed securities, and promoter of financial planning, and to provide related services connected to such activities, without distributing any profits to members. It encourages the general public to become shareholders in a variety of local industries. Its main operations include securities listing, supervision of listed companies and information disclosure, trading, market surveillance and member supervision, information dissemination and investor education.

Trading[edit]

Trading System[edit]

The SET has operated fully computerized trading since April 1991, through the Automated System for the Stock Exchange of Thailand (ASSET), which enables trading to be efficient, equitable and fluid. In this trading system, two principal methods of trading are available: Automatic Order Matching (AOM) and Put-Through transactions (PT).

Automatic Order Matching (AOM)[edit]

AOM trading performs the order matching process without human intervention. After brokerage houses electronically send buy or sell orders from their offices to the SET mainframe computer, the ASSET system queues the orders and arranges them according to a price-then-time priority. This means orders are first grouped according to price, with the best price taking precedence. Then, within each price group, orders are arranged according to time. In terms of the matching process, there are two methods: continuous order matching and call market method.

Continuous Order Matching procedures operate during the regular trading sessions. The ASSET continuously matches the first buy and sell orders in the queue, and at the same time, confirms each executed transaction via the member's (broker's) terminal.

The Call market matching is utilized in calculating the opening and closing prices of a security at the opening and closing of the trading hours. This method allows brokers to enter their orders to be queued for matching at a specified time at a single price that generates the greatest trading volumes for that particular stock.

Put Through (PT) Trading[edit]

The ASSET also allows brokers to advertise their buy or sell interests by announcing bid or offer prices. Members may then deal directly with each other, either on behalf of their clients or for themselves. Prices may be adjusted during the negotiation; hence, the effective executed price may not be the same as that advertised and may not follow the price spread rules. After concluding negotiations, dealers must send details of the result(s) to the ASSET for recording purposes.

Trading hours[edit]

Trading on the SET is conducted on all bank business days, normally from Monday through Friday. Each day there are five trading sessions:[3]

  • Pre-opening session I: This is the morning auction which starts at 9:30 am and ends at a random time between 9:55 am and 10:00 am when the open price is determined.
  • Morning Session: This session starts immediately after the pre-open (at a random time between 9:55 am and 10:00 am) and continues till 12:30 pm.
  • Pre-opening session II: This is the afternoon auction which starts at 1:45 pm and ends at a random time between 2:15 pm and 2:30 pm when the afternoon open price is determined.
  • Afternoon Session: This session starts immediately after the pre-open II (at a random time between 2:25 pm and 2:30 pm) and continues till 4:45 pm.
  • Closing session: The close auction starts at 4:45 pm and ends at a random time between 4:45 pm and 5:00 pm.

Trading units[edit]

Generally, each trading unit, a so-called "board lot", contains 100 units of each security; however, for each security priced at 500 baht or more for 6 consecutive months, one board lot is equivalent to 50 units.

Price regulations[edit]

Floor and Ceiling Limits[edit]

On 1 December 1997, the SET introduced new floor and ceiling price limits for trading. The former limits allowed stock prices to fluctuate within a range of 10 per cent, while the current limits allow prices of a stock to fluctuate within a range of 30 per cent of the previous closing price on the main board. However, if the market price is less than 1 baht, stock prices may fluctuate within a range of 100 per cent of the previous closing price. Ceiling and floor limits apply to each trading board utilizing the AOM system, with the exception of the foreign board.

Circuit Breaker[edit]

Together with the introduction of the floor and ceiling trading limits, the SET also implemented a circuit breaker system to ease any unusual volatility in the market that may cause investor panic. The circuit breaker operates in two stages. Firstly, if the SET index falls by 10% from the previous day's close, all trading in listed securities will be halted for 30 minutes. Secondly, if the SET index falls by 20% from the previous day's close (i.e. another 10%), trading in all listed securities will be halted for one hour. If the circuit breaker is in effect at the closing time of a session, trading resumes in the next session.

Industry Group Indices and Sectoral Indices[edit]

In addition to the SET Index, which is calculated from the prices of all common stocks on the main board, the SET also provides industry group indices and sectoral indices. Both these types of indices are calculated from the prices of the common stocks which share the same fundamentals which characterize each particular industry group and sector, respectively.

The index calculation methodology is identical to that of the SET Index, which is a market capitalization weighted index. This means the larger the capitlization of a stock the more its weighing in the index. The Industry Group and Sectoral index calculations are adjusted in line with the same factors that influence the calculation of the SET Index. These influencing factors include the shifting of a stock from one sector to another sector or the shifting of a stock from a sector in one industry group to a sector in another industry group. In addition, the base date of the Industry Group Indices is on December 31, 2003, which was when the Industry Group Indices were established and set at 100 points. Smaller capitalized shares are under-represented because both institutions and traders by their very mandate, must avoid these due to liquidity constraints. For this reason many smaller or mid cap Thai stocks may be underpriced. Smaller companies in Thailand make up over 70% of its GDP and often have higher growth rates then the averages. Yet, most trade at p/e discounts to the Thai market while often yielding considerably higher dividends. There is no Thai small cap. index to show for this.

There are eight Industry Group Indices (divided into 25 Sectoral Indices):

  • Agro and Food Industry (Agribusiness, Food and Beverage)
  • Consumer Products (Fashion, Home and Office Products, Personal Products and Pharmaceuticals)
  • Financials (Banking, Finance and Securities, Insurance)
  • Industrials (Automotive, Industrial Materials & Machinery, Packaging, Paper & Printing Materials, Petrochemicals & Chemicals)
  • Property and Construction (Construction Materials, Property Development)
  • Resources (Energy & Utilities, Mining)
  • Services (Commerce, Health Care Services, Media & Publishing, Professional Services, Tourism and Leisure, Transportation & Logistics)
  • Technology (Electronic Components, Information and Communication Technology)

Largest Public companies[edit]

Top 10 as of 25 June 2012[edit]

Rank Company Market Value (mill.baht) Sector
1 PTT 885,452.88 Energy & Utilities
2 PTT Exploration and Production 554,437.56 Energy & Utilities
3 Advanced Info Service 517,318.59 Information & Communication
4 Siam Commercial Bank 481,885.83 Banking
5 Kasikorn Bank 384,118.26 Banking
6 Siam Cement 374,400.00 Construction Materials
7 Bangkok Bank 347,409.41 Banking
8 CP ALL 316,654.32 Commerce
9 Charoen Pokphand Foods 294,231.79 Food and Beverage
10 Total Access Communication 172,850.20 Information & Communication

Top 15 as of 1 October 2010[edit]

Rank Company Market Value Sector
1 PTT 844,208,667,225 Energy & Utilities
2 PTT Exploration and Production 524,058,365,800 Energy & Utilities
3 Siam Cement 400,800,000,000 Construction Materials
4 Siam Commercial Bank 354,508,350,636 Banking
5 Bangkok Bank 296,825,070,017 Banking
6 Kasikorn Bank 278,814,812,485 Banking
7 Advanced Info Service 277,524,627,760 Information & Communication
8 PTT Chemical 203,578,312,500 Petrochemicals & Chemicals
9 Banpu Public Company Limited 194,571,464,180 Energy & Utilities
10 Krung Thai Bank 194,527,632,600 Banking
11 Charoen Pokphand Foods 187,998,445,650 Food and Beverage
12 CP ALL 186,465,642,996 Commerce
13 Bank of Ayudhya 154,890,665,549 Banking
14 Indorama Ventures 125,693,860,363 Petrochemicals & Chemicals
15 Thai Oil 110,161,505,142 Energy & Utilities

Top 15 as of 4 June 2007[edit]

Rank Company Market Value Sector
1 PTT 757,380,462,750 Energy & Utilities
2 PTT Exploration and Production 358,229,448,300 Energy & Utilities
3 Siam Cement 307,200,000,000 Construction Materials
4 Advanced Info Service 267,478,151,764 Information & Communication
5 Bangkok Bank 227,152,304,386 Banking
6 Kasikorn Bank 174,295,709,653 Banking
7 Thai Beverages 155,747,490,970 Food
8 Thai Oil 146,882,006,856 Energy & Utilities
9 PTT Chemical 143,796,126,450 Petrochemicals & Chemicals
10 Siam Commercial Bank 138,386,199,718 Banking
11 Krung Thai Bank 128,567,113,500 Banking
12 IRPC 123,825,000,000 Energy & Utilities
13 Bank of Ayudhya 111,027,284,502 Banking
14 Total Access Communication 99,549,804,986 Information & Communication
15 Shin Corporation 97,499,734,056 Information & Communication

See also[edit]

References[edit]

  1. ^ a b c d Stock Exchange of Thailand (15 February 2012). Management Discussion and Analysis 2011. Retrieved 6 October 2011. 
  2. ^ "Thai Stock Market". [Melb Thai Magazine Australia]. Retrieved 2013-04-21. 
  3. ^ "The Stock Exchange of Thailand - Supervision of Market - Trading system and procedure". The Stock Exchange of Thailand. Retrieved July 1, 2011.