Interview: Kesara Manchusree
How will the blockchain-based marketplace deepen capital raising opportunities for start-ups?
KESARA MANCHUSREE: At present, the start-up segment in Thailand is still in an early stage. Many businesses are not qualifying for traditional capital raising mechanisms due to several factors. Still, there is quite a lot of demand in Thailand to invest in start-ups, as they are recognised as a future growth industry. SET has already taken many steps to promote start-up businesses and this is an extension of that. We engage with the segment through a learning centre aimed to equip new entrepreneurs and small and medium-sized enterprises with practical knowledge and innovation. SET has also established a fund to invest in start-ups. What this marketplace will essentially do is organise an ecosystem.
In 2016, for example, we already had over 500 start-ups appear on start-up portal, and we will extend this to the marketplace platform. The marketplace will be limited to institutional and high-net-worth investors, excluding retail investors. The reason we limit public investor access is that we know start-ups are a risky asset. The main aim of the platform will be to allow these firms to share their information with the broader marketplace and serve as a matching vehicle where businesses can engage with one another.
In terms of the blockchain format, which is a new technology, we are still hesitant to employ it on a mass scale. The marketplace initiative will serve as a good entry point as it is a closed platform.
What steps are being taken to increase the level of cross-border listings of equities, infrastructure funds and other financial vehicles?
KESARA: The Thai capital market has been open for quite some time in terms of allowing equities and infrastructure funds to be listed here, and steps such as accepting English-language documents and disclosure of information of the same level as Thai companies for listing purposes have already been taken, although some barriers remain. We have engaged with regional partners on this topic and some positive progress has been made in listing infrastructure funds on SET. É lectricité du Laos – the Lao state operator for electricity generation, transmission and distribution – has already issued bonds in Thailand. There is a lot of demand from the private sector in neighbouring nations to raise funding outside their home countries and utilise the funds for developing their nations. However, there are some worries that this propagation trend will make the capital markets in those respective countries less liquid.
In terms of aiding the development of these capital markets, we offer various technical services to other exchanges in the region. Being a proponent of these exchanges, we support them trying many different things at once in order to allow investors as many opportunities as possible, rather than using a slower and more gradual form of development which often causes hesitance among investors.
What factors account for the stability of SET in spite of global volatility?
KESARA: I believe that two major internal factors exist. First, the listed companies on SET have been doing an excellent job in terms of having strong offshore investments and being well-diversified. Thailand is a very developed and mature market, so looking for opportunities in the region and further afield is crucial. Some 46% of the revenue of all listed companies comes from abroad, and roughly 200 of 650 listed companies have offshore activities, which has resulted in listed companies’ performance outpacing Thailand’s GDP growth by two or three times.
The second factor is our investor mix. About 50% are local retail investors, 25% are local institutions and 25% are offshore investors. In other exchanges, foreign investors account for a larger percentage which can cause volatility. Thai investors post strong local investments, even with the opportunity to invest offshore.
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