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Stock Exchange of Thailand (SET) to launch 16 single stock futures

Thai bourse to launch 16 single stock futures on March 21 The 16 new single stock futures will be based on stocks from the SET50 Index, which is composed of the 50 largest securities, listed on The Stock Exchange of Thailand (SET) and will come from 9 sectors.

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Thai bourse to launch 16 single stock futures on March 21 The 16 new single stock futures will be based on stocks from the SET50 Index, which is composed of the 50 largest securities, listed on The Stock Exchange of Thailand (SET) and will come from 9 sectors.

These new securities, the third batch of single stock futures issued by TFEX, will provide investors with more investment alternatives, and enable them to better manage risks and increase profitability, TFEX Managing Director Kesara Manchusree noted.

The 16 new underlying stocks from 9 sectors are Sri Trang Agro-Industry PCL (STA) from Agribusiness Sector; Thanachart Capital PCL (TCAP) and TMB Bank PCL (TMB) from Banking Sector; CP All PCL (CPALL) and Home Product Center PCL (HMPRO) from Commerce Sector; IRPC PCL (IRPC) and Thai Oil PCL (TOP) from Energy & Utilities Sector; Charoen Pokphand Foods PCL (CPF), Minor International PCL (MINT) and Thai Union Frozen Products PCL (TUF) from Food & Beverage Sector; Total Access Communication PCL (DTAC) and True Corporation PCL (TRUE) from Information & Communication Technology Sector; Indorama Ventures PCL (IVL) from Petrochemicals & Chemicals Sector; Pruksa Real Estate PCL (PS) from Property Development Sector; and BTS Group Holdings PCL (BTS) and Thai Airways International PCL (THAI) from Transportation & Logistics Sector.

Moreover, TFEX is seeking to lower the minimum tick size of stock futures to THB0.01, down from THB0.10, to better accommodate the minimum prices of underlying stocks. Such a reduction would be in line with practices adopted by international futures markets. A smaller tick size will result in a narrower Bid & Ask spread, which will allow investors to trade stock futures at a price that more precisely fits market conditions than is currently possible.

Currently, this process is pending an approval from the Securities and Exchange Commission (SEC). At present, TFEX’s stock futures trading depends upon 14 underlying stocks traded on the SET. In 2010, the daily average trading volume was 4,006 contracts, with 35,356 open interest contracts.

The underlying stocks of the top-5 most traded stock futures were Krung Thai Bank PCL for KTB futures, Italian-Thai Development PCL for ITD Futures, Quality Houses PCL for QH Futures, Thoresen Thai Agencies PCL for TTA Futures and Land & Houses PCL for LH Futures, respectively. After the addition of 16 new underlying stocks, TFEX’s stock futures will have a total of 30 underlying stocks.

 

There are still many issues besetting the Thai capital market: few institutional investors, small retail investor base, limited financial products, high transaction costs, and lack ofefficient regulatory enforcement are some examples. Moreover, Thailands capital markets in recent times have grown at a very slow pace. The size of the stock market compared to GDP is only 51% (as of June 2009) which is smaller than other countries in the region such as Hong Kong (845%), Singapore (202%), Malaysia (104%) and South Korea (66%).

Should this trend continue, Thailands capital market will stagnate and become increasingly marginalized. Various studies have shown that inadequate development of the capital markets will impact its ability to raise, channel and monitor resources efficiently. In the end, this will lead to loss of growth opportunities, standard of living and prosperity.

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