Bangkok--15 Oct--SET
Overall, the performance of Thai capital market in September 2009 was satisfactory. Indices and market capitalization continued to improve, while daily average trading value reached a 26-month high. Major contributions to this favorable development were economic improvements in the global and Thai economies. Foreign investors have now been net buyers for seven continuous months, and investors are increasingly diversifying their fund allocations to include small and medium-sized firms.
On average, in Q2/2009, the performances of listed companies continued to improve from the lowest points in Q4/2008 in terms of net profit, net profit margin, return on equity (ROE), and ability to service debt. This was due mainly to their effective cost management. Meanwhile, during Q3/2009, more funds were raised through the IPOs, compared to during the first half of 2009, reflecting rising confidence in economic and market outlook among businesses.
1. Performance Overview: Thai vs. regional exchanges
The Stock Exchange of Thailand (SET) Index as of end-September increased by 9.8% from end-August 2009, which was in line with other regional exchanges and the second highest rate of index increase in the region after Taiwan. During year to date from end-2008 to end-September 2009, SET Index has soared by 59.4%. The P/E ratio for the SET, as of October 8, 2009 rose to 29.2 times, which was in line with most regional markets. Meanwhile, SET’s market dividend yield at the end of September 2009, continue to be among the highest in the region.
2. Summary of Thai capital market performance
In general, SET and Market for Alternative Investment (mai) Indices both continually increased since end-2008. SET’s market capitalization as of end-September 2009 soared by 60.4% over its end-2008 figure to reach THB5.72 trillion (approx. USD171.63 billion), the highest in 15 months. This was driven mainly by rising trend of SET Index, which rose by 59.4% over this period, to reach 717.07.
Likewise, mai’s market capitalization and index movement have both been in the same positive direction. Market capitalization as of end-September 2009 increased by 53.4% of the end-December 2008 figure to reach at THB29.86 billion (approx. USD895.48 million). Meanwhile, the mai Index rose by 23.4% over that same period to be at 201.02. Due to rising stock prices, the number of securities having the price to book value ratio (P/BV) less than one has decreased from 353 securities as of year end-2008 to 277 as of September 2009, equivalent to 53.58% of all 517 common stocks.
3. Trading activity
Average daily trading value reached its highest level in 26 months. In September 2009, total trading value was THB573.52 billion (approx. USD17.19 billion), 36% more than the value in August 2009, with a daily average trading of THB26.06 billion (approx. USD781.66 million), the highest level in 26 months or since July 2007, where the daily average trading value stood at THB32.18 billion (approx. USD965.16 million). Retail investors continued to account for the highest share of trading activities, with 65% of total trading value.
The rise in total trading value was partly a result of fund flows from foreign investors, particularly those in developed countries, looking to enhance returns. In September 2009, foreign investors had a net buy position of THB22.90 billion (approx. USD686.64 million). This marked the seventh consecutive month during which they had been net buyers. Over January-September 2009, foreign investors had net buy position of THB55.10 billion (approx. USD1.65 billion), compared to all of 2008, when they were net sellers for a total of THB162.35 billion (approx. USD4.86 billion).
In addition, since March 2009 when the SET index started to rise, trading activities had become more diversified in terms of fund allocation into securities in different market capitalization and industry groups. In particular, the share of trading activities in the securities of the top-ten highest market capitalization (SET10) had decreased gradually from 57% of total trading value in March 2009 to 35% in September 2009. This took place as investors increased the trading activities among medium and small sized securities. Meanwhile, the trading activities had also become less concentrated in terms of the industry groups as well. For example, the share of trading values among the securities in the Banking and Energy sectors had declined from year-high figure of 65% of total trading value in March 2009 to year-low figure of 50% in September 2009. The industry groups showing the most increases in terms of percentage of total trading value were Property Development, Property and Construction Materials.
4. Active trading accounts
The number of active trading accounts as of end-August 2009 was at 127,107 accounts, a rise of 34% over the same period of last year. The average trading value of THB3.27 million (approx. USD0.10 million) per account was an increase of 24% over August 2008. Meanwhile, the active rate, the ratio of active accounts over total trading accounts, has rose to 23.2% in August 2009, compared to the 20.6% in July 2009.
Both the number of accounts and value of securities traded through internet trading in September 2009 continued their rising trends. In particular, the value of internet trading reached THB128.87 billion (approx. USD3.86 billion) in September 2009, an increase of 224% compared to September 2008. This was equivalent to 22.5% of total trading value -- the highest share ever. Meanwhile, average trading value per active internet account in September 2009 was THB2.79 million (approx. USD0.08 million).
5. Overview of the derivatives market
Daily average trading of 13,164 contracts in the derivatives market registered in September 2009 was an 8% rise over the earlier month, driven by the increase in gold futures trading, which rose by 32% from the previous month. During September 2009, the daily average trading contracts in gold futures had reached the historic high since the start of trading in February 2009 as investor had been drawn by the continual rise of gold price.
6. Overview of funds raised
In Q3/2009, listed companies raised total fund of THB7.10 billion (approx. USD213.16 million), from the SET and mai. Of these, THB5.15 billion (approx. USD154.66 million) was raised through the primary market (IPO), which was much higher compared to those raised during the first half the year, reflecting improved business confidence in the economic and business outlook. The top two companies raising the most funds through IPOs during Q3/2009 were Bangkok Life Assurance PCL (BLA) for the amount of THB2.61 billion (approx. USD78.53 million), followed by Siam Global House PCL (GLOBAL) for THB663 million (approx. USD19.88 million). In addition, THB1.95 billion (approx. USD58.50 million) was raised through the seasonal equity offering (SEO) in Q3/2009. The relatively low figure of SEO during 2009 was due to the low leverage level among most listed companies, as reflected by relatively low debt to equity ratios, making it less necessary for them to raise fund from equity, especially during current economic recessionary environment.
Special topics
1. Listed companies’ operating performance and efficiency in Q2/20091
Effective cost management by listed companies resulted in improved trend of net profit, net profit margin, ROE, and ability to service debt, from their low levels in Q4/2008: 283 of 379 listed companies recorded combined net profit of THB101.4 billion, increasing 78% from Q1/2009 figure, mainly due to more effective cost management. The average cost-to-income ratio decreased from the peak at 100.2% in Q4/2008 to 90.7%, making the net profit margin increase to 7.2%. This net profit margin was even higher than Q2/2008 figure of 6.6%. Rising net profit also pushed ROE to 3.84% from 2.20% in Q1/2009. Q2/2009’s debt-to-equity ratio of 1.16 still remained close to 1.14 of Q1/2009 and 1.07 of Q2/2008. Meanwhile, debt repayment capability rose to 8.15 times due to an increasing net profit and a decreasing interest loan rates.
2. Listed companies’ dividend payments
During January-September 2009, listed firms paid out higher dividends compared to the amount paid during the same period of last year in tandem with their increased profitability. Total paid-out dividends were THB198.10 billion (approx. USD5.93 billion) during Q1-Q3/2009, an increase of 20% over the same period of last year, and only 0.25% lower than the amount paid during the same period in 2007. Thus, it could be referred that the capacity of listed companies to pay dividends has recovered and is now close to the level in 2007.
1 Exclude companies in Banking, Property Fund and Non-Performing Groups