What new initiatives is Maybank Kim Eng currently involved in?
SORNPAISARN: The basic services of this business are quite typical. Our initiatives are to continuously improve on what we are doing. I think our quality is important. This requires good research, and good advice. In the last year, we have added several key people to our team to help with these improvements. This will help ensure our core product is strong. Technology is also very important. We are focusing on improving our infrastructure. Launching new applications is important as the leading broker. We have a market share of about 13%. Our market share in Internet business is about 15.8% for March 2013 and YTD 15.55%. Our focus is on ensuring that our infrastructure is strong, and our client services are good as well.
How successful have the technological advancements recently implemented by Maybank Kim Eng Securities been?
SORNPAISARN: We were the first broker to have KE Live TV, which is the television version of an internet broker. We present research every morning to our clients. This has been very successful. We have been number one by far among Internet users. Many investors have viewed our content and opened accounts with us. Right now, we are opening about 200-300 accounts every day.
How competitive is the brokerage market in Thailand? What is Maybank Kim Eng doing to maintain its leading market share?
SORNPAISARN: The market is very competitive. We have more than 30 brokers competing for investors. Every brokerage has differentiated itself from the next, based on quality of research, advice, perspective, and technology. We do not want to encourage simple strategies like price wars to steal investors. We have a good norm. We must respect business ethics, or everyone will end up losing.
How do you see AEC 2015 liberalization measures affecting Thai capital markets?
SORNPAISARN: We first saw liberalization measures around 2001. During that time, several crazy brokers implemented a strategy reducing commission rates to unreasonably low levels. All brokers experienced losses. After this we agreed upon a price floor. We introduced several rates. We have made gradual changes towards liberalization. We have introduced what we call stepping pricing. Larger accounts have lower commissions. Right now, competition is at a reasonable level. If everyone competes freely and reasonably, everyone will be healthy and the clients will be happy. We see that investors in AEC countries will benefit from the expansion. Thai investors can invest in Singaporean or Malaysian markets, and vice-versa. However, the process will need to be implemented gradually. The key limitation is IT and telecommunication related. The Thai market will become very popular. The trading volume last year was about THB 31.5bn ($1bn) on average. This year it is over THB 60bn, which is over $2bn a day. On a peak day we have reached THB100bn ($3.4bn). We are proud of this. The problem is telecommunication. The additional traffic from Singapore or Malaysia may cause problems. We are not ready to handle this amount of traffic. We are working on that. When we expand our telecommunication network, we can continue to move forward.
How have derivatives grown in Thailand and what are your projections for the future?
SORNPAISARN: The TFEX market has grown significantly, but it is still small compared to the equity market. It has good future prospects. People need a better education and understanding, and they need the proper strategies for utilization. I think it is growing well.
What is your future outlook for Thailand capital markets as a whole? Which indicators represent positive trends and which represent challenges?
SORNPAISARN: Right now, our P/E Ratio for our current level is 14 times the current year. People may feel that Thai markets outperform other markets too much. I think people should take into account two major factors. One is the improvement in terms of the political situation. Everything seems to continue on. Stability in the market is good and we expect it to continue. The second part is about the government policy to reduce the tax rate from 30% to 23% last year, and then to 20% this year. Companies will see a great improvement in profits. This growth is embedded however. Without it, we would not have outperformed other markets as much. There are still prospects that Thai markets will keep growing. Looking at our economy, consumption is strong. People are willing to spend money. Investments are strong as well. The government also plans to invest a lot. 2011 was a slow year with the flood, but we are seeing good signs of improvement on the horizon.
The Thai market will become very popular. The trading volume last year was about THB 31.5bn ($1bn) on average. This year it is over THB 60bn, which is over $2bn a day. On a peak day we have reached THB100bn ($3.4bn). We are proud of this. The problem is telecommunication. The additional traffic from Singapore or Malaysia may cause problems. We are not ready to handle this amount of traffic.
How has the tie-up with Maybank changed business for you?
SORNPAISARN: Maybank has helped with our reputation. People know that we are the subsidiary of the largest bank in Malaysia. Maybank is the largest in terms of market capital in Malaysia. People respect this. Our credit rating improved from A to AA- as a result of this. This is equal to Bank of Ayudhya and CIMB Thailand. During the last six months, we were upgraded again to AA, which is equal to Bangkok Bank, Kasikorn Bank, and Siam Commercial Bank. This is great for our reputation. This is also good for our margin loans. Before Maybank, our funding was at most THB 6bn ($207m). Now we are able to lend about THB 15bn ($517m). This represents about 20% of the market share.
We are a strong broker. Maybank helped us re-position ourselves to become even more institutionalized. Maybank was also careful to ensure the name was left as is, because we are a leader in the market. In the institutional market, we have seen substantial improvements. Among local retails, our local retail is 13%, compared to retail, which is 17%. Among local institutions, compared to local market institutions, we had about 4% last year. This year it is about 5%. Globally we have improved from 2% to a 2.7% market share. This is a large improvement. We are the leading retailer in Thailand. We have a very good portion of retail. We are quite active in the market. Local and international investors are always interested in what the leading broker is doing. I believe adding key research can induce business, and people will become more familiar with our institution. We see there is substantial room for us to grow. We are adding key research to provide to our investors. Our target is going to be 5% - 10% in the next two to three years. I believe that this is a good prospect. We are moving forward as a team. We will provide our full line up of products for our international investors. I think this is something that can add better services to our clients. We are also focusing on the investment banking side. Maybank is strong in that area. We all know how difficult it can be to compete. With our backing by Maybank, our targets are higher, and we are more ambitious. The last two years we have had THB 40m ($1.3m) in fees. Last year, we had THB 57m ($1.9m) in fees. We also have introduced business to our head office. Maybank in Singapore has participated in lending to Thai Beverage Group SGD 500m ($404m). This is a substantial experience that Kim Eng has never had before. We have good momentum to move forward. Our goal for this year is about $10m.