Boost to turnover mulled
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The Association of Securities Companies has met to discuss ways of boosting turnover on the stock market following the adverse impact from a number of recent events, including Standard & Poors' downgrading of the credit ratings of nine euro-zone countries
Asco chairperson Pattera Dilokrungthirapop said after a meeting on Monday that turnover on the Stock Exchange of Thailand (SET) had been thinner due to recent negative factors, including the S&P downgrades and the flood-hit fourth-quarter earnings performance of listed companies.
“Amid thin market volume, we had a discussion on whether [there was anything] we could do. It might be difficult to go for marketing promotion to boost volume. Each brokerage house also needs to be cautious about marketing activities that lure investors through free gifts rather than return on investment.
“[Then there is] competing on commission now that commission liberalisation has ended, but each brokerage house perceives what it should do. Now is a transitional period, and there is a need for more frequent talks to update the situation,” Pattera said.
Currently, each brokerage can set no more than 5 per cent of its income as a marketing budget. This is not expected to change, given its appropriate level, she said, adding that the issue is how to make customers’ money generate a sustainable return.
The Bank of Thailand’s planned collection of a higher contribution on bank deposits, coupled with lower deposit protection for investors, could prompt depositors to shift their money to higher-yield investments, giving securities houses some opportunity, she said.
Meanwhile, Maybank Kim Eng Securities (Thailand)’s research noted that foreign investors had gradually lowered their stock investment in Thailand with their net selling for a fifth consecutive day, and short sales of SET50 Futures for two consecutive days. UBS Securities has been the highest net seller at more than Bt500 million among foreign brokerage houses in the SET, despite its having been the most bullish over Thai stocks.
Most listed companies’ fourth-quarter earnings are expected to be affected by last year’s floods, Maybank said. Bank profits are expected to be hit through a slowdown in credit growth, narrower net interest margins and higher spending for employees, the brokerage said. The energy and petrochemical group could receive impacts from lower prices of commodities in the previous quarter, which could become a limitation and risk for the market, it added.
