What new initiatives is OSK Securities Thailand involved in?
CHOY: OSK Thailand is part of OSK investment Bank in Malaysia. OSK Investment Bank is one of the top 5 investment banks in Malaysia. If you look at the breakdown of the products offered by financial institutions, you will see that for some of these we rank 1st and we are top 3 in some of the other areas we operate in. Our initiative has been to branch out of Malaysia and come into Thailandâ€™s capital market. We are trying to replicate the success we had in Malaysia into Thailand, even though we are late incomers. We think that, with all of the product development we have been through and with the expertise we gained so far, we will be able to succeed in Thailand too.
How competitive are brokerage and investment advisory services in Bangkok?
CHOY: The brokerage and investment advisory services in Bangkok are very competitive. If you look at the brokerage landscape in Thailand, you will see 32 brokers. OSK is a new incomer here in Thailand and this makes it a little bit tougher for us to compete with the other players, whether they are local brokers or brokers affiliated to a banking group. The landscape is very, very competitive. What is important from our point of view is how best we can excel in our 4 areas of expertise, that is, in product launching, product development and innovation, channel, and efficiency.
How have volumes for more sophisticated financial instruments, such as derivatives and futures, grown in Thailand? What are your projections for the future?
CHOY: Certainly, we are moving in the right direction in terms of the Thai marketâ€™s development. The capital market is moving from the more traditional kind of products, like equities, into more sophisticated financial instruments, such as derivatives, futures, options, ETFs, and so on. In July, the stock exchange of Thailand revamped the whole trading system in order to be able to absorb the more sophisticated financial products. From the regulatorâ€™s point of view, this is a good move and in the right direction. For us, for the brokers, who are client-centric, this means that we have to keep up with the pace of development and change. From the product development angle, we are moving on the right direction too. We will definitely be able to see more sophisticated products coming into the market, such as ETFs, or maybe, towards the end of the day, we will probably see dual currency investment if the Bank of Thailand is able to open up a little bit more in terms of currency control.
What are your projections for bond issuance looking forward? How successful were the governmentâ€™s Baht bond issuances this year?
CHOY: If you look at the so called potential auctions coming into the market, in November 2012, there is going to be 72bn Baht ($2.3bn) of government bonds to be auctioned and probably about 63bn Baht ($2.1bn) of state agency bonds to be auctioned. So, you can say that this area is very, very active. A lot of primary deals are involved in the auctions of the so-called government bonds and state agency bonds. From that point of view, both the government bond and the state agency bond sector are very lively in Thailand.
How have Western debt crises impacted the Thai equity markets?
CHOY: Numbers never lie. If you look at the numbers for the first nine months of this year compared to the correspondent period last year, the export volume to the European countries has decreased by 15%. In terms of percentage, the total export value dropped from 5% last year to about 9% this year. Thus, if you look at the figures, certainly the crises impacts the economy of Thailand and that will transpire as well on the performance of the listed companies, especially those who have a lot of exposure to Europe. Business has been slowing down too and export is not performing that well. Thus, under this point of view, the European crisis has affected the EPS growth for the listed companies.
The Thai regulator is trying to internationalize the capital market and improve the existing framework. For example, there is a lot of talk about legal framework reforms, accounting framework reforms, and that is to make sure that we will be able to achieve internationalization of the stock exchange in a short span of time.
What are the strengths and weaknesses of Thailandâ€™s capital market regulatory framework?
CHOY: Certainly the regulator is getting very proactive in trying to liberalize the capital market here in Thailand. They have been doing a very good job in increasing the competitiveness of the capital market, because at this stage everybody knows that this is a globalized world and money shifts in and out borders. We cannot remain in a closed economy and on this basis the regulators are certainly making a lot of efforts in improving the competitiveness of the capital market vis-Ã -vis the other capital markets in the region. Apart from that, they have been doing a lot of work in terms of investorsâ€™ protection, especially minority interests. They are very concerned about the minority interest and they are making a lot of rules and regulations in order to protect these. This is to make sure that the trading environment is healthy for everyone. Needless to say, the Regulator is encouraging the production of new products in the capital market. Thus, in terms of product development, the regulator is very active. In a nutshell, what I am trying to say is that the regulatory framework is moving in the right direction. I have been in Thailand for the past 23 years and have seen how the trading system opened up. Right now everything has been computerized, so even under this perspective the regulators are making a lot of progress in comparison to other countries. In the short term, I would give credit to the regulators. They have been doing a very good job, rolling up their sleeves and dealing with a lot of issues, just to make sure that the Thai capital market is fair, transparent, liberalized, and competitive vis-Ã -vis other regional markets.
What are your future projections for Thailandâ€™s capital markets? Which indicators are showing the most positive trends and which remain challenges?
CHOY: The Thai regulator is trying to internationalize the capital market and improve the existing framework. For example, there is a lot of talk about legal framework reforms, accounting framework reforms, and that is to make sure that we will be able to achieve internationalization of the stock exchange in a short span of time. From that point of view, indicators are showing a positive trend because again we are talking about money flows across regions in split seconds and so on. In terms of product development, the regulator is doing a great job. Just recently they have been introducing the infrastructure fund and that is a good move and in the right direction, as it will certainly attract foreign investments into Thailand. The challenge remains for the Thai capital market to become more sophisticated. Only then you will be able to attract all the foreign investments into Thailand.