What new initiatives is DBS Securities Thailand currently involved in?
DILOKRUNGTHIRAPOP: The new initiatives that DBS Thailand is pursuing is bringing new products into the market. The Thai market is now looking for more returns as the investors in Thailand are seeking something different. We are bringing two things into the market. One is structured products, which is something that the Thais are not really used to. These new products allow them to have more choice. If they have shares they can come and deposit them if they are looking for more returns or they can deposit money if they are looking to buy shares in the future.
The other thing that we are trying to pursue is overseas investment. In the past, Thai investors have been confined to onshore investment and that meant they could not diversify risk. Now that the Bank of Thailand has opened up, investors have more choice. So now what we have to do is bring the overseas market closer to Thai investors and that is why we're bringing online trading into Thailand. This allows Thai investors to see other markets very closely. But that is not enough, we also need to help them invest wisely, so we are also bringing in news, research, and corporate info into the Thai market.
Where are the best foreign investment opportunities in Thailand today?
DILOKRUNGTHIRAPOP: I think the equity market is still very interesting and I think in the future we still have a lot of potential for growth. Thailand in the past has actually been Bangkok and surrounding areas, but I think our growth potential is not just here. With the AEC opening up and urbanization happening throughout Thailand, especially in the upper border with Myanmar, and in the North, the Chinese are coming down, and so is Vietnam. So there is a lot of opportunity and I believe that the wealth will actually expand outside of Bangkok. So I think we will have a next wave of growth that will allow Thailand to actually still continue to expand.
With so many investment advisory services and brokerages in the market, what types of businesses do you think will succeed, long-term, in Bangkok?
DILOKRUNGTHIRAPOP: Actually, we started seeing a lot of competition coming into the market and that is because we have had a very good year and we had liberalized the whole market 2 years ago - so that is the good news. The bad news is that more people want to come in. But I think this market is big enough for the competition. As I said, there is still a lot of room for growth. But in terms of how we should handle the industry, I think discount brokers are not going to last. In the past, we always talked about discount, but it has proven not to give the investors the answer. In the end, investors are looking for good advice and return on their investment more than they are looking for cheap commission. So everyone is changing their thinking hats and investing more into research and technology to help them get information faster, to help them analyze the stock market better, and to help them understand new products better. So I think the whole game is changing and new players cannot expect quick returns â€“ the game will have to be much longer.
Do you think we are going to see more M&A activity among brokerage, advisory, and banking firms?
DILOKRUNGTHIRAPOP: I think it already happened a few years ago with brokers and now the choice is very minimal within the country. We may see acquisition from outside of Thailand from those who want to have exposure in Thailand. But I think the activity will not be at the level that we have seen before. I think we will see more M&A on our client side and the brokers will look to do cross border activity rather than onshore or among themselves.
How will the ASEAN Economic Community (AEC) impact Thailandâ€™s capital markets and financial services industry?
DILOKRUNGTHIRAPOP: The AEC will definitely have an impact on the way we do our business because, apart from competing among ourselves, we will have competition from places like Singapore, which is probably more advanced than us, and our neighbor Malaysia, who are all trying to expand their markets and their customer base. Actually, we are already seeing that happen in Thailand, so that means that competition is happening already. But at the same time our own market is expanding; our onshore investors are looking to expand outside of their territory and are looking at investment opportunities outside of the region. So in the end there are pros and cons and everyone will have to think about the right strategy to allow themselves to capture this growth and benefit from the market opening up. But I think in the end it is a win-win because the cake is bigger.
I think we still see a lot of potential because of the corporates. Take a look at the corporates listed on the Stock Exchange of Thailand, I think they can achieve earning growth of about 15% to 20% per year. That is quite respectable from an investment point of view. This means the Thai market will give a reasonable return over the next 2-3 years.
What kinds of growth do you project from up-country and second tier cities in Thailand?
DILOKRUNGTHIRAPOP: From up-country in Thailand, I am very bullish about the opportunity, and that is why we spend a lot of time going outside of Bangkok as opposed to concentrating only on Bangkok itself. I foresee that not only the financial sector, but the business sector is also starting to move up-country. We see big department stores, property companies, and the banking sector followed. In the end, when people start to have more money, the securities companies have to follow to help them manage their money. So it has become a pattern. So what we have to do now is focus on education and to make sure that customers stay with us and they actually know what they are investing in and that they have the right attitude towards investment. We actually do this down to the student at universities because it is very important to implant this mentality correctly right at the university level. So a lot of work has been done in that way.
On the broker side, they are actually going up-country a lot more. A lot of seminars are being done outside of Bangkok. A lot of analysts are actually travelling outside of Bangkok and I think that is a good sign and I think we will see more and more of that happening.Â Another thing that is happening is the listed companies themselves are very happy to go up-country because it is good for their name as well. This is very good for them and allows a lot of investors to get to know them as well.
How are SET volumes today and what are your projections going forward?
DILOKRUNGTHIRAPOP: Trading volume at the Stock Exchange of Thailand (SET) has been rising a lot. The average at the beginning of this year went up as high as THB70bn ($2.2bn) a day and I think this is a bit abnormal. We canâ€™t say that the volume doubled in 1 year on a normal basis. The average daily turnover last year was THB32bn a day. This year, I think the normal volume, after we had the correction, has now stabilized at about THB40bn ($1.3bn) per day, still higher than last yearsâ€™ average. So that is good news. There are a few factors affecting the market at the moment. There is a lot of uncertainty outside Thailand and inside Thailand, mostly on policy changes. The thing that affects Thailand, and not only Thailand but the whole world is quantitative easing (QE). People face uncertainty whether the fund flow is going to come or is going to stop. So a lot of people decided to wait and see for a while.
Now we have a series of uncertain policies coming out including within Thailand itself such as the stimulus package dying down. So the government has a number of issues to deal with and Thai investors took a wait and see stance. But at least the market stabilized around THB40bn, which I think is still comfortable and very healthy for the market.Â I think we still see a lot of potential because of the corporates. Take a look at the corporates listed on the Stock Exchange of Thailand, I think they can achieve earning growth of about 15% to 20% per year. That is quite respectable from an investment point of view. This means the Thai market will give a reasonable return over the next 2-3 years. So I think we are still doing fine.
What does Thailand need to do to further encourage foreign investment?
DILOKRUNGTHIRAPOP: I think the problem with the FDI coming into to Thailand is that we have to be a bit more prepared and organized in terms of infrastructure to help them make sure that it is convenient and easy. We have resolved a few things, such as corporate income tax, and that has helped a lot of foreign investors to come to Thailand because it has made us more competitive with the neighboring countries that we compete with. Another issue that the government needs to address is skilled labour, we cannot sell low cost cheap labour anymore. We have to think about value added and will have to do a lot more research and development and that is something the government has to think about as well. We have to support the corporates in that direction. The companies coming into Thailand are willing to invest in R&D, so we have to prepare and enable them for these things as well.