ASEAN linkage scheme brings opportunities to Thai investors

The Nations, 11 October 2012

Charamporn Jotikasthira, president of the Stock Exchange of Thailand, talks about Asean Linkage in an interview with Krungthep Turakij.

The Stock Exchange of Thailand has announced that it is ready to trade through Asean Linkage. How will investors seize opportunities through this programme?

Individual investors will be able to buy 2,300 shares of a company in Malaysia or Singapore at their convenience. It’s like buying stocks on the SET with a tax exemption for capital gains.

Interesting issues are the methods for securities reception and settlement of prices or fees. How will these issues be managed?

Trade transactions will be done by existing brokerages. On October 15, nine securities houses will participate in the programme. These nine companies will be able to place trading orders to Singapore’s and Malaysia’s stock exchanges directly.

At the end of the day, prices will be converted into Thai baht and the securities firms will handle the settlements like they do in Thailand.

What are the risks that we should warn investors about while they make overseas investments?

When investors make overseas investments, they have to understand the economic situation and trend of the country they invest in. They have to understand the stocks they are interested in. They may need advice from their marketers or analysts to understand these stocks.

Investors will gain opportunities to invest in some stocks and some businesses, like big palm [plantations] in Malaysia, that do not exist in Thailand. If investors are interested in the palm-plantation business, they may invest in Malaysian stocks.

The integration of Asean investment should attract more foreign funds. Simultaneously, investors may need to compare investment in each market. Do you expect an increase of funds or turnover through this programme in Thailand?

In the initial stage, there may not be many funds, as everyone may not be accustomed to this. This is regarded as a big preparation for two types of investment before the long-term integration of the Asean Economic Community in 2015. I believe that bourses in Vietnam, the Philippines and Indonesia may join [the programme] soon. We will make preparations for the opening of the Asean economy.

Investors have an opportunity to do more investing while the stock exchange has a chance to gain trading volume. How do Thai brokerages and listed companies get ready for this programme? There will be more competitors.

Listed companies may need to conduct additional activities, such as roadshows, for these two countries. It’s like opening markets. Malaysia is a relatively large market.

In Singapore, some small houses are interested in Thai stocks. Thai listed companies need to make more introductions to investors in these two countries. Thai brokerages, securities analysts and marketers have to understand Asean stocks better.