Thailand has also seen a steady development of its capital markets in recent decades. To remain competitive and relevant in the age of disruption, Thai market regulators have been proactive in efforts to drive innovation in the market.
As Thailand’s economy evolves, the country is seeking new ways to maintain growth momentum amid shifting paradigms in business, shaped by digital disruption. In 2017, the Thai government launched a transformation strategy – known as Thailand 4.0 – which focuses on high-tech industries and innovation.
Under the auspices of Thailand 4.0, the capital markets sector is slated to undergo changes. Although the capital markets sector is not a strategic industry under Thailand 4.0, it’s still expected to benefit from increased use of financial technology (fintech).
In 2017, the Thai government launched a transformation strategy – known as Thailand 4.0 – which focuses on high-tech industries and innovation.
For instance, the fintech wave has led to the advent of new business models and solutions, such as equity crowdfunding in Thailand. In May 2018, the Stock Exchange of Thailand (SET) launched the Launchpad and Investment Vehicle for Enterprises (LiVE) platform as a crowdfunding market. LiVE uses blockchain, which represents one type of distributed ledger technology (DLT), to offer growth opportunities to start-ups. The platform provides crowdfunding for such businesses, allowing them to utilise it to reach a wider audience and expand customer bases, sourcing support from both the public and private sectors.
Thai market regulators have shown interest in digitisation and the new ways it could create efficiencies and deliver value to Thailand’s capital markets and investors. For example, the SET is set to introduce its Digital Gateway to the National Digital ID (NDID) platform by mid-2020. The NDID platform, Thailand’s first and only blockchain-based system, is a government-led initiative to enable non-face-to-face authentication and verification of clients using various financial and government services. FundConnext, SET’s mutual fund distribution platform, is integrated with NDID platform to support electronic account opening.
Like other leading stock exchanges around the world, SET is also keen to use emerging technologies like DLT to achieve operational efficiency and identify new growth opportunities.
Thai market regulators have shown interest in digitisation and the new ways it could create efficiencies and deliver value to Thailand’s capital markets and investors.
Highs Thailand has been the most liquid market in the Association of Southeast Asian Nations (ASEAN) region since 2012 and has the highest number of listed companies selected for inclusion in the Morgan Stanley Capital International (MSCI) Standard Index in ASEAN. In 2018, Thailand launched its first depositary receipt, with an underlying asset as an exchange-traded fund that invests in VN30 index, which tracks performance of the top 30 large-cap Vietnamese stocks. To keep up with emerging technologies, SET has also enhanced existing capital market infrastructure and digitised processes to better serve market participants.
In early 2019, Thailand announced plans to build a digital asset exchange, and its decision to apply for a digital asset operating license. This comes as no surprise as DLT and asset tokenisation continue to drive a new wave of innovation worldwide. The country is keen to be one of the early movers in providing a digital-asset ecosystem to enable investors to tap into the new tokenised assets.
Lows Thailand was the first country in the ASEAN region to enact legislation regulating the offering of digital assets and business undertaking digital asset-related activities. In May 2018, Thailand’s Securities and Exchange Commission (SEC) published two Emergency Decrees to enact the law and regulations related to digital asset business operations and Thai tax ramifications on certain income earned from digital assets. While there are still unanswered questions and ambiguities in the existing regulatory
framework – such as which custody requirements are applicable to digital assets – any move towards clearer guidelines is a step in the right direction. Thailand is expected to continue working with the industry to keep up with technological innovation and introduce robust regulations which strike a balance between legislating for investor protection and encouraging innovation. In November 2019, the SEC announced plans to amend the decree on digital asset businesses.
The move is aimed at facilitating the growth of digital assets while shielding investors from unnecessary risk. The regulator is examining the royal decree to determine if there are aspects of it that could hinder the development of digital asset businesses.
Thailand is expected to continue working with the industry to keep up with technological innovation and introduce robust regulations which strike a balance between legislating for investor protection and encouraging innovation.
According to statistics from World Federation of Exchanges, market capitalisation in Thailand increased by approximately 29 per cent from the end of 2015 to 2018. As of June 2019, SET ranked second in the region with a market capitalisation of around USD574 billion; which is a 15 per cent increase from end of 2018. The SET Index at end-June 2019 increased 6.8 per cent from the previous month and 10.6 per cent from end-2018 to 1,730.34 points. SET was the best performer in the region. In 2018, Thailand raised about USD2.46 billion of funds. It came second in the region and accounted for 27 per cent of total funds raised in 2018. In 2019, Thailand accounted for 39 per cent of the total funds raised through initial public offerings (IPOs) in the region. The SET netted USD2.63 billion in IPO proceeds as of 15 November 2019, making it the top performer in Southeast Asia. Apart from positive market sentiments, the Thai bourse’s high liquidity helps to attract more IPO listings. All these positive developments coupled with other initiatives – such as local market regulators collaborating on a regulatory reform to modernise regulations and eliminate duplicate processes – enhance the overall attractiveness of Thailand’s capital markets. Thailand’s growth is expected to continue and accelerate in years to come – it’s important for foreign investors to have a trusted partner who has deep expertise and insights on the local market. Standard Chartered is the largest market clearer in Thailand and has extensive involvement in shaping and accelerating the process of change in Thailand’s capital market infrastructure. Standard Chartered is a key market participant in Thailand and provides a comprehensive, integrated custody offering across Asia, Africa and the Middle East, thereby enabling clients to benefit from the consistency and connectivity of its network.
