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Thailand in lead pack for Asean capital markets

Apr 18. 2019
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By The Nation

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THAILAND ranks in the top three of capital markets in Asean and is expected to stay in the leading pack in 2030, trailing only Singapore and Indonesia, a study indicates.

 

 

The report, Capital Markets in 2030, drew on research by The Economist Intelligence Unit on behalf of PwC. 

The survey asked nearly 400 executive at companies from across the globe for their views on the factors that are defining the development of global equity capital market, following up from a 2011 report.

The survey showed that the top four exchanges that issuers with consider beyond their home exchange are the New York Stock Exchange (NYSE) (37 per cent), Nasdaq (26 per cent), London Stock Exchange (LSE) (24 per cent), and Hong Kong stock exchange (24 per cent), the research said.

Boonlert Kamolchanokkul, partner for financial services, clients and markets leader for PwC Thailand, said Thailand’s stock market continues to be an attractive source of funding for companies of all sizes looking to raise capital to build sustainable growth.

According to data from the Stock Exchange of Thailand (SET), over the past decade the country saw 305 companies listed both on the SET and Market for Alternative Investment with combined issuance of US$24 billion (Bt770 billion).

“Another noteworthy finding was that Thailand ranks among the top markets that are expected to lead capital raising in 2030 along with Asean peers like Singapore and Indonesia,” said Boonlert. “Depending on the costs involved in a transaction, equity financing can be cheaper than taking out a bank loan.

“The Thai bourse’s high liquidity, partly due to a growing investor base with improved financial knowledge, has helped to attract more IPO listings than in the past. More active market regulators have ensured that listings on the bourses are of high quality. 

“All of these positive developments make us believe that the Thai stock market is likely to draw even greater investment from companies both in Thailand and overseas. The SET’s plan to develop a collaborative digital asset ecosystem, for instance, should also add to its digital transformation, creating greater interest in the overall market.”

Ross Hunter, PwC Global IPO Centre leader, said that excessive optimism about emerging markets has been tempered by political and market realities. Expectations are now for a more closely run race between developed and emerging markets exchanges.

“Looking at the IPO pipeline, China (55 per cent) is the country predicted to generate the most new issuers by 2030 followed by India (45 per cent), the US (41 per cent), Brazil (21 per cent) and, despite Brexit concerns, the UK (18 per cent),” he said. “China and India also led in this category in our previous survey. Both have been taking steps to develop their equity capital markets, with a number of recent initiatives in China in particular.”

Hunter said liquidity remains the top priority (selected as most important by 49 per cent of respondents) when choosing a listing location. There is also an increase in the focus on valuations (32 per cent) and concern about the costs of listing (29 per cent). 

PwC anticipates that technology will continue to be a significant driver in the future of public companies. Increasing efforts by leading financial centres to win over technology and “new economy” companies will continue to intensify competition between the New York and mainland China and Hong Kong exchanges in particular.

PwC said it is clear that in recent years companies’ options for raising capital have increased. Some 76 per cent of respondents believe that there are now more choices of both public and private financing routes in both developed and emerging markets.

Although 70 per cent of respondents believe a public listing is becoming a less important source of funding globally, a similar proportion of survey respondents think it would be advantageous for successful companies to go public over some point in their life cycle. The most attractive private funding option, selected by 55 per cent of respondents, is private equity. 

 

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