Finance Minister Dr. Thanong gave the opening address at ‘SET in the City 2005’, which is being co-hosted by the SET and Money & Banking Magazine on Nov. 17 – 20, 2005 at the Queen Sirikit National Convention Center.
The event’s theme is “The SET: 30 Years of Providing All You Need in the Investment World”. The theme reflects the assortment of financial products that serve the needs of all investors in the Thai market, including equity, debt, financial and agricultural derivatives, as well as mutual fund products.
The Minister noted, “The variety of choices will be good for businesses and investment conditions. The economy will also be more stable in the long term, as the banking sector becomes less depended upon.
“Previously fundraising of Thai businesses depended largely on the banking sector, which accounts for approximately 120% of Gross Domestic Product (GDP). This dependency is not good for the economy. However, recently there have been more choices available. Thus, firms are less dependent on banks as they begin to turn towards the capital market instead for fundraising. The fundraising values of the bond, stock, and credit markets now stand at approximately 50%, 70% and 70% of Thailand’s GDP respectively, ” Dr. Thanong said.
In the past, the value of funds raised by Thai businesses through the bond and stock markets were equal to approximately 12% and 23% of Thailand’s GDP. It is expected that the size of the funds raised through the stock market will be equivalent to the country’s GDP sometime in the next five years. Also, the government is promoting the bond market to enable it to achieve an equal size to the stock market within the next 10 years.
Nevertheless, Dr. Thanong noted that there was still a pitfall in the Thai market. Currently, retail investors still make up 63% of the total market investors. This group of people, with only 100,000 accounts, is dominant with their active trading. Meanwhile, the proportion of institutional and foreign investors are about 10% and 27% respectively. This dominance of retail investors can lead to an unstable market. We should therefore encourage them to invest more though institutions.
Dr. Thanong also said, “The government has the will to develop the Thai capital market in line with international standards. It is on track with the 5-year Thai Capital Market Master Plan, formulated to make the market dynamic and keep pace with the changing environment, including cross-border capital flows. The size of global assets and investment flows are approximated at USD38 trillion.
President of the SET, Mr. Kittiratt Na-Ranong, disclosed that drafting of the next Thai Capital Market Master Plan would be concluded by end-2005. This plan will enable the Thai capital market to keep abreast of the free market as well as foreign competition.
Mr. Kittiratt expected that the target share of trading by institutions as a proportion of total securities trading would be achieved within the next 4-5 years, so as to make the market more balanced.