With global exchange trends moving towards digitization, automation, and technological upgrade, how is the SET remaining ahead of the curve?
JOTIKASTHIRA: In September last year, we upgraded our trading platform, SET Connect. It is one of the fastest in Asia. It has a latency of about 150 microseconds so it can handle high frequency trading and other types of trading. However, the concerns today about high frequency trading are more on the control side where we need to consider slowing down irregular transactions. Â So basically the technology side is ready to go. We have also changed the Market Data System platform and the third initiative is the Market Surveillance System. So all three engines, which are the key to exchanges, are brand new. All the brokers have changed their platforms as well. So the Stock Exchange of Thailand and our members are ready to roll and expand the business. The capability will include multi-currency trading and various sophisticated products required by todayâ€™s institutional investor.
What are your projections for derivative market growth?
JOTIKASTHIRA: The derivatives market has been growing. In the past year we have launched new products such as currency futures, which has improved quite a lot right from the start. We have oil futures and gold futures. Our gold futures market is the 5th largest in the world. So the acceptability of sophisticated products has been quite well received by the retail market in Thailand and our goal is to increase the volume at a higher speed by expanding the base and giving more education to the Thai investors. Product wise, I believe we have pretty much the full suite of products. We will be focusing more on providing better tools for the investor. For example, there are some options trading tools for the SET 50.
How has the SET fared in a global context in 2012?
JOTIKASTHIRA: In 2012, the index performance was among the best in Asia. We have gone up by 35%, and if you include the dividend portion, the return would be 40%. As far as the volume is concerned, I believe we are probably the only exchange that has a positive daily volume average from 2011 to 2012. So basically, we have a daily turnover above $1bn for the past 2 years. Actually, last year it was about $1.06bn and this became the most liquid in ASEAN today.
What are your projections for 2013?
JOTIKASTHIRA: As far as the volume projection for this year, we believe it is going to be about 5% growth. The main reason is because a lot of the volume in the past year has come from the retail investor and the trend seems to be slowing down on that side, especially when the price earning ratio of many of the small stocks are fairly high. So I am quite conservative. So if that is the case, then we would only rely on the foreign volumes and this will depend on other factors around the world. So I think it will be about 5%.
What are your future projections for Thai capital markets?
JOTIKASTHIRA: Well the positive trend is the quality. Last year, we were upgraded on corporate governance by the Asian Corporate Governance Association that ranks exchanges. Out of 11 countries, we were number 8 in 2007, we were number 4 in 2010, and last year we were number 3. Also on the quality side, the SET has been driving more on the sustainable development front. So we will be creating our own indices towards the quality of governance, social responsibility, and environmental responsibility. So I believe the future growth story will be on the quality of the listed firms in addition to all of the state of the art technology and facilities, which are equal to the best in the world.
In 2012, the index performance was among the best in Asia. We have gone up by 35%, and if you include the dividend portion, the return would be 40%. As far as the volume is concerned, I believe we are probably the only exchange that has a positive daily volume average from 2011 to 2012.
To what extent have political strife, natural disasters, and other economic menaces impacted Thai capital markets in recent years?
JOTIKASTHIRA: If you look back since 2005, we had 9 external shocks starting with SARS, Bird Flu, the tsunami, a coup dâ€™Ã©tat, the closure of the airport, the major flood, etc. There was only one quarter when Thai listed firms made a loss and it was after the Lehman Brothers crisis. The rest of the quarters we always made money. In the past 3 years, 75 out of the top 100 listed firms have been able to pay dividends consistently and therefore are doing quite well even right after the Lehman Brothers crisis. So the resiliency and the ability to weather the storm by Thai listed firms has been proven. Also, if you look at the export sector, since 2005, the Thai Baht was THB41 to the USD and right now it is at 30, so that is about a 33% appreciation. Throughout the years, the exporters have been screaming that the currency was too strong. But if you plot graphs of the 6 export sectors within the SET you will find the profits have either been steady or increased dramatically. So it is proven that even the 9 external shocks and also all of the negative factors affecting the exporters from the currency point of view have not kept everyone from doing very well. The adaptability of the Thai listed firms will be the key success factor in the future.