Stock Exchange of Thailand
Encyclopedia
The Stock Exchange of Thailand (SET) is the national stock exchange
of Thailand
. It is located in Bangkok
. As of 31 December 2007, the Stock Exchange of Thailand had 541 listed companies with a combined market capitalization
of $280 billion. The indices
of the stock exchange are SET Index, SET50 Index and SET100 Index
.
developed in two phases. The privately owned Bangkok Stock Exchange operated from 1962 to the early 1970s. The Second National Economic and Social Development Plan (1967-1971) established the Securities Exchange of Thailand to mobilize funds to support industrialization and economic development. This was the country's first officially sanctioned, supervised and regulated orderly securities market.
. The Thai stock market began in July 1962 when a private group established an organized stock exchange as a limited partnership. The group later became a limited company and changed its name to the "Bangkok Stock Exchange Co., Ltd." (BSE) in 1963.
Despite its well-intended foundation, the BSE was rather inactive. Annual turnover
was only 160 million baht in 1968, and 114 million baht in 1969. Trading volumes continued to fall sharply thereafter to 46 million baht in 1970 and 28 million baht in 1971. The turnover in debenture
s reached 87 million baht in 1972, but stocks continued to perform poorly, with turnover hitting an all-time low of only 26 million baht. The BSE finally ceased operations in the early 1970s.
It is generally accepted that the BSE failed to succeed because of a lack of official government support and a limited investor understanding of the equity market.
a plan for the establishment of such a market, with appropriate facilities and procedures for securities trading.
In 1969, as recommended by the World Bank
, the government acquired the services of Professor Sidney M. Robbins from Columbia University
to study the development channels of the Thai capital market. Professor Robbins had previously served as Chief Economist
at the United States Securities and Exchange Commission. The same year proved an eventful one for the Thai capital market, as the Bank of Thailand
also formed a Working Group on Capital Market Development, which was assigned the task of establishing the stock market. A year later, in 1970, Professor Robbins produced a comprehensive report entitled "A Capital Market in Thailand". This report became the master plan for the future development of the Thai capital market.
In 1972, the government took a further step in this direction by amending the "Announcement of the Executive Council No. 58 on the Control of Commercial Undertakings Affecting Public Safety and Welfare". The changes extended government control and regulation over the operations of finance and securities companies, which until then had operated fairly freely. Following these amendments, in May 1974, long-awaited legislation establishing "The Securities Exchange of Thailand" (SET) was enacted. This was followed by revisions to the Revenue Code at the end of the year, allowing the investment of savings in the capital market. By 1975, the basic legislative framework was in place and on April 30, 1975, "The Securities Exchange of Thailand" officially started trading. On January 1, 1991 its name was formally changed to "The Stock Exchange of Thailand" (SET).
As defined in the SEA (1992), the SET's primary roles are
Its mandate is to be a market or center for the trading of listed securities, and promoter of financial planning, and to provide related services connected to such activities, without distributing any profits to members.
It encourages the general public to become shareholders in a variety of local industries.
Its main operations include securities listing, supervision of listed companies and information disclosure, trading, market surveillance and member supervision, information dissemination and investor education.
Continuous Order Matching procedures operate during the regular trading sessions. The ASSET continuously matches the first buy and sell orders in the queue, and at the same time, confirms each executed transaction via the member's (broker
's) terminal.
The Call market matching is utilized in calculating the opening and closing prices of a security
at the opening and closing of the trading hours. This method allows brokers to enter their orders to be queued for matching at a specified time at a single price that generates the greatest trading volumes for that particular stock.
The circuit breaker operates in two stages.
Firstly, if the SET index falls by 10% from the previous day's close, all trading in listed securities will be halted for 30 minutes.
Secondly, if the SET index falls by 20% from the previous day's close (i.e. another 10%), trading in all listed securities will be halted for one hour.
If the circuit breaker is in effect at the closing time of a session, trading resumes in the next session.
indices. Both these types of indices are calculated from the prices of the common stocks which share the same fundamentals which characterize each particular industry group and sector, respectively.
The index calculation methodology is identical to that of the SET Index, which is a market capitalization weighted index. The Industry Group and Sectoral index calculations are adjusted in line with the same factors that influence the calculation of the SET Index. These influencing factors include the shifting of a stock from one sector to another sector or the shifting of a stock from a sector in one industry group to a sector in another industry group. In addition, the base date of the Industry Group Indices is on December 31, 2003, which was when the Industry Group Indices were established and set at 100 points.
There are eight Industry Group Indices (divided into 25 Sectoral Indices):
Top 15 Largest Public Companies in Thailand as of 4 June 2007
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
of Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
. It is located in Bangkok
Bangkok
Bangkok is the capital and largest urban area city in Thailand. It is known in Thai as Krung Thep Maha Nakhon or simply Krung Thep , meaning "city of angels." The full name of Bangkok is Krung Thep Mahanakhon Amon Rattanakosin Mahintharayutthaya Mahadilok Phop Noppharat Ratchathani Burirom...
. As of 31 December 2007, the Stock Exchange of Thailand had 541 listed companies with a combined market capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...
of $280 billion. The indices
Stock market index
A stock market index is a method of measuring a section of the stock market. Many indices are cited by news or financial services firms and are used as benchmarks, to measure the performance of portfolios such as mutual funds....
of the stock exchange are SET Index, SET50 Index and SET100 Index
SET50 Index and SET100 Index
The SET50 and SET100 Indices are the primary stock indices of Thailand. The constituents of both lists are companies listed on the Stock Exchange of Thailand in Bangkok.-Calculation:...
.
History
The modern Thai capital marketCapital market
A capital market is a market for securities , where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets...
developed in two phases. The privately owned Bangkok Stock Exchange operated from 1962 to the early 1970s. The Second National Economic and Social Development Plan (1967-1971) established the Securities Exchange of Thailand to mobilize funds to support industrialization and economic development. This was the country's first officially sanctioned, supervised and regulated orderly securities market.
The Bangkok Stock Exchange
1961 Thailand implemented its first five-year National Economic and Social Development Plan to support the promotion of economic growth and stability and to develop the Kingdom's standard of livingStandard of living
Standard of living is generally measured by standards such as real income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods , or measures of health such as...
. The Thai stock market began in July 1962 when a private group established an organized stock exchange as a limited partnership. The group later became a limited company and changed its name to the "Bangkok Stock Exchange Co., Ltd." (BSE) in 1963.
Despite its well-intended foundation, the BSE was rather inactive. Annual turnover
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
was only 160 million baht in 1968, and 114 million baht in 1969. Trading volumes continued to fall sharply thereafter to 46 million baht in 1970 and 28 million baht in 1971. The turnover in debenture
Debenture
A debenture is a document that either creates a debt or acknowledges it. In corporate finance, the term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note...
s reached 87 million baht in 1972, but stocks continued to perform poorly, with turnover hitting an all-time low of only 26 million baht. The BSE finally ceased operations in the early 1970s.
It is generally accepted that the BSE failed to succeed because of a lack of official government support and a limited investor understanding of the equity market.
The Stock Exchange of Thailand
Despite the failure of the BSE, the concept of an orderly, officially supported securities market in Thailand attracted considerable attention. The Second National Economic and Social Development Plan (1967-1971) proposed, for the first time,a plan for the establishment of such a market, with appropriate facilities and procedures for securities trading.
In 1969, as recommended by the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, the government acquired the services of Professor Sidney M. Robbins from Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
to study the development channels of the Thai capital market. Professor Robbins had previously served as Chief Economist
Chief economist
The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis...
at the United States Securities and Exchange Commission. The same year proved an eventful one for the Thai capital market, as the Bank of Thailand
Bank of Thailand
- History :The Bank of Thailand was first set up as the Thai National Banking Bureau. The Bank of Thailand Act was promulgated on 28 April 1942 vesting upon the Bank of Thailand the responsibility for all central banking functions...
also formed a Working Group on Capital Market Development, which was assigned the task of establishing the stock market. A year later, in 1970, Professor Robbins produced a comprehensive report entitled "A Capital Market in Thailand". This report became the master plan for the future development of the Thai capital market.
In 1972, the government took a further step in this direction by amending the "Announcement of the Executive Council No. 58 on the Control of Commercial Undertakings Affecting Public Safety and Welfare". The changes extended government control and regulation over the operations of finance and securities companies, which until then had operated fairly freely. Following these amendments, in May 1974, long-awaited legislation establishing "The Securities Exchange of Thailand" (SET) was enacted. This was followed by revisions to the Revenue Code at the end of the year, allowing the investment of savings in the capital market. By 1975, the basic legislative framework was in place and on April 30, 1975, "The Securities Exchange of Thailand" officially started trading. On January 1, 1991 its name was formally changed to "The Stock Exchange of Thailand" (SET).
Roles
Legislation establishing "The Securities Exchange of Thailand" (SET) was formally enacted in 1974 and the SET began trading on April 30, 1975. On January 1, 1991 "The Securities Exchange of Thailand" officially changed its name to "The Stock Exchange of Thailand" (SET).As defined in the SEA (1992), the SET's primary roles are
- to serve as a center for the trading of listed securities, and to provide the essential systems needed to facilitate securities trading
- to undertake any business relating to the Securities Exchange, such as a clearing houseClearing house (finance)A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions...
, securities depository center, securities registrar, or similar activities - to undertake any other business approved by the SEC
Operations
The Stock Exchange of Thailand is a juristic entity set up under the Securities Exchange of Thailand Act, B.E. 2517 (1974). Operations started on April 30, 1975. It operates under the legal framework laid down in the Securities and Exchange Act, B.E. 2535 (1992).Its mandate is to be a market or center for the trading of listed securities, and promoter of financial planning, and to provide related services connected to such activities, without distributing any profits to members.
It encourages the general public to become shareholders in a variety of local industries.
Its main operations include securities listing, supervision of listed companies and information disclosure, trading, market surveillance and member supervision, information dissemination and investor education.
Trading System
The SET has operated fully computerized trading since April 1991, through the Automated System for the Stock Exchange of Thailand (ASSET), which enables trading to be efficient, equitable and fluid. In this trading system, two principal methods of trading are available: Automatic Order Matching (AOM) and Put-Through transactions (PT).Automatic Order Matching (AOM)
AOM trading performs the order matching process without human intervention. After brokerage houses electronically send buy or sell orders from their offices to the SET mainframe computer, the ASSET system queues the orders and arranges them according to a price-then-time priority. This means orders are first grouped according to price, with the best price taking precedence. Then, within each price group, orders are arranged according to time. In terms of the matching process, there are two methods: continuous order matching and call market method.Continuous Order Matching procedures operate during the regular trading sessions. The ASSET continuously matches the first buy and sell orders in the queue, and at the same time, confirms each executed transaction via the member's (broker
Broker
A broker is a party that arranges transactions between a buyer and a seller, and gets a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal...
's) terminal.
The Call market matching is utilized in calculating the opening and closing prices of a security
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
at the opening and closing of the trading hours. This method allows brokers to enter their orders to be queued for matching at a specified time at a single price that generates the greatest trading volumes for that particular stock.
Put Through (PT) Trading
The ASSET also allows brokers to advertise their buy or sell interests by announcing bid or offer prices. Members may then deal directly with each other, either on behalf of their clients or for themselves. Prices may be adjusted during the negotiation; hence, the effective executed price may not be the same as that advertised and may not follow the price spread rules. After concluding negotiations, dealers must send details of the result(s) to the ASSET for recording purposes.Trading hours
Trading on the SET is conducted on all bank business days, normally from Monday through Friday. Each day there are five trading sessions–- Pre-opening session I: This is the morning auction which starts at 9:30 am and ends at a random time between 9:55 am and 10:00 am when the open price is determined.
- Morning Session: This session starts immediately after the pre-open (at a random time between 9:55 am and 10:00 am) and continues till 12:30 pm.
- Pre-opening session II: This is the afternoon auction which starts at 2:00 pm and ends at a random time between 2:25 pm and 2:30 pm when the afternoon open price is determined.
- Afternoon Session: This session starts immediately after the pre-open II (at a random time between 2:25 pm and 2:30 pm) and continues till 4:30 pm.
- Closing session: The close auction starts at 4:30 pm and ends at a random time between 4:35 pm and 4:40 pm.
Trading units
Generally, each trading unit, a so-called "board lot", contains 100 units of each security; however, for each security priced at 500 baht or more for 6 consecutive months, one board lot is equivalent to 50 units.Floor and Ceiling Limits
On 1 December 1997, the SET introduced new floor and ceiling price limits for trading. The former limits allowed stock prices to fluctuate within a range of 10 per cent, while the current limits allow prices of a stock to fluctuate within a range of 30 per cent of the previous closing price on the main board. However, if the market price is less than 1 baht, stock prices may fluctuate within a range of 100 per cent of the previous closing price. Ceiling and floor limits apply to each trading board utilizing the AOM system, with the exception of the foreign board.Circuit Breaker
Together with the introduction of the floor and ceiling trading limits, the SET also implemented a circuit breaker system to ease any unusual volatility in the market that may cause investor panic.The circuit breaker operates in two stages.
Firstly, if the SET index falls by 10% from the previous day's close, all trading in listed securities will be halted for 30 minutes.
Secondly, if the SET index falls by 20% from the previous day's close (i.e. another 10%), trading in all listed securities will be halted for one hour.
If the circuit breaker is in effect at the closing time of a session, trading resumes in the next session.
Industry Group Indices and Sectoral Indices
In addition to the SET Index, which is calculated from the prices of all common stocks on the main board, the SET also provides industry group indices and sectoralEconomic sector
An economy may include several sectors , that evolved in successive phases.* The ancient economy was mainly based on subsistence farming....
indices. Both these types of indices are calculated from the prices of the common stocks which share the same fundamentals which characterize each particular industry group and sector, respectively.
The index calculation methodology is identical to that of the SET Index, which is a market capitalization weighted index. The Industry Group and Sectoral index calculations are adjusted in line with the same factors that influence the calculation of the SET Index. These influencing factors include the shifting of a stock from one sector to another sector or the shifting of a stock from a sector in one industry group to a sector in another industry group. In addition, the base date of the Industry Group Indices is on December 31, 2003, which was when the Industry Group Indices were established and set at 100 points.
There are eight Industry Group Indices (divided into 25 Sectoral Indices):
- Agro and Food Industry (Agribusiness, Food and Beverage)
- Consumer Products (Fashion, Home and Office Products, Personal Products and Pharmaceuticals)
- Financials (Banking, Finance and Securities, Insurance)
- Industrials (Automotive, Industrial Materials & Machinery, Packaging, Paper & Printing Materials, Petrochemicals & Chemicals)
- Property and Construction (Construction Materials, Property Development)
- Resources (Energy & Utilities, Mining)
- Services (Commerce, Health Care Services, Media & Publishing, Professional Services, Tourism and Leisure, Transportation & Logistics)
- Technology (Electronic Components, Information and Communication Technology)
Largest Public companies
Top 15 Largest Public Companies in Thailand as of 1 October 2010| Rank | Company | Market Value | Sector |
|---|---|---|---|
| 1 | PTT PTT Public Company Limited PTT Public Company Limited, PTT PCL, or simply PTT is a Thai state-owned SET-listed oil and gas company. Formerly known as the Petroleum Authority of Thailand, it owns extensive submarine gas pipelines in the Gulf of Thailand, a network of LPG terminals throughout the Kingdom, and is involved in... |
844,208,667,225 | Energy & Utilities |
| 2 | PTT Exploration and Production | 524,058,365,800 | Energy & Utilities |
| 3 | Siam Cement Siam Cement The Siam Cement Public Company Limited or SCG is the largest cement company in Thailand. It is listed on the Stock Exchange of Thailand. In 2011, it was also ranked as the 2nd largest company in Thailand and the 620th largest company in the world by Forbes 2000.It was founded under the Royal... |
400,800,000,000 | Construction Materials |
| 4 | Siam Commercial Bank Siam Commercial Bank Siam Commercial Bank is a bank from Thailand, based in Bangkok.- History :Established by Royal Charter in 1907, Siam Commercial Bank PCL was Thailand's first bank. At the time of its establishment, the only banks in the country were branch offices of foreign banks... |
354,508,350,636 | Banking |
| 5 | Bangkok Bank Bangkok Bank Bangkok Bank Public Company Limited , is a Thai commercial bank, with approximately US$64.6 billion in total assets. Its branch network includes over 1000 branches within Thailand, with 25 international branches or representative offices in 13 economies, spanning ASEAN and major economic countries,... |
296,825,070,017 | Banking |
| 6 | Kasikorn Bank Kasikorn Bank Kasikornbank Public Company Limited formerly known as the Thai Farmers Bank was established on 8 June 1945 by Choti Lamsam, with registered capital of Baht 5 million and has been listed on the Stock Exchange of Thailand since 1976... |
278,814,812,485 | Banking |
| 7 | Advanced Info Service Advanced Info Service Advanced Info Service PCL is Thailand's largest GSM mobile phone operator with 28.8 million customers as of February 2010. Founded in April 1986, AIS started off as a computer rental business... |
277,524,627,760 | Information & Communication |
| 8 | PTT Chemical | 203,578,312,500 | Petrochemicals & Chemicals |
| 9 | Banpu Public Company Limited Banpu Public Company Limited Banpu Public Company Limited is a mining and power company in Thailand. It has coal mining operations in Thailand, Indonesia and China, and coal-fired Power generation operations in Thailand and China... |
194,571,464,180 | Energy & Utilities |
| 10 | Krung Thai Bank Krung Thai Bank Krung Thai Bank Public Company Limited is the state-owned bank under the license issued by the Ministry of Finance.- History :The bank was incorporated on March 14, 1966 through the merger of Agriculture Bank Limited and Mondhon Bank Limited, which the government was their major shareholder... |
194,527,632,600 | Banking |
| 11 | Charoen Pokphand Foods Charoen Pokphand Foods Charoen Pokphand Foods Public Company Limited is Thailand's largest agribusiness firm. It is a publicly traded subsidiary of the Charoen Pokphand Group.... |
187,998,445,650 | Food and Beverage |
| 12 | CP ALL | 186,465,642,996 | Commerce |
| 13 | Bank of Ayudhya | 154,890,665,549 | Banking |
| 14 | Indorama Ventures | 125,693,860,363 | Petrochemicals & Chemicals |
| 15 | Thai Oil | 110,161,505,142 | Energy & Utilities |
Top 15 Largest Public Companies in Thailand as of 4 June 2007
| Rank | Company | Market Value | Sector |
|---|---|---|---|
| 1 | PTT PTT Public Company Limited PTT Public Company Limited, PTT PCL, or simply PTT is a Thai state-owned SET-listed oil and gas company. Formerly known as the Petroleum Authority of Thailand, it owns extensive submarine gas pipelines in the Gulf of Thailand, a network of LPG terminals throughout the Kingdom, and is involved in... |
757,380,462,750 | Energy & Utilities |
| 2 | PTT Exploration and Production | 358,229,448,300 | Energy & Utilities |
| 3 | Siam Cement Siam Cement The Siam Cement Public Company Limited or SCG is the largest cement company in Thailand. It is listed on the Stock Exchange of Thailand. In 2011, it was also ranked as the 2nd largest company in Thailand and the 620th largest company in the world by Forbes 2000.It was founded under the Royal... |
307,200,000,000 | Construction Materials |
| 4 | Advanced Info Service Advanced Info Service Advanced Info Service PCL is Thailand's largest GSM mobile phone operator with 28.8 million customers as of February 2010. Founded in April 1986, AIS started off as a computer rental business... |
267,478,151,764 | Information & Communication |
| 5 | Bangkok Bank Bangkok Bank Bangkok Bank Public Company Limited , is a Thai commercial bank, with approximately US$64.6 billion in total assets. Its branch network includes over 1000 branches within Thailand, with 25 international branches or representative offices in 13 economies, spanning ASEAN and major economic countries,... |
227,152,304,386 | Banking |
| 6 | Kasikorn Bank Kasikorn Bank Kasikornbank Public Company Limited formerly known as the Thai Farmers Bank was established on 8 June 1945 by Choti Lamsam, with registered capital of Baht 5 million and has been listed on the Stock Exchange of Thailand since 1976... |
174,295,709,653 | Banking |
| 7 | Thai Beverages Thai Beverages Thai Beverage is Thailand's largest and one of the largest beverage alcohol companies in South East Asia with distilleries in Thailand, Scotland, Poland, Ireland, China, and France... |
155,747,490,970 | Food |
| 8 | Thai Oil | 146,882,006,856 | Energy & Utilities |
| 9 | PTT Chemical | 143,796,126,450 | Petrochemicals & Chemicals |
| 10 | Siam Commercial Bank Siam Commercial Bank Siam Commercial Bank is a bank from Thailand, based in Bangkok.- History :Established by Royal Charter in 1907, Siam Commercial Bank PCL was Thailand's first bank. At the time of its establishment, the only banks in the country were branch offices of foreign banks... |
138,386,199,718 | Banking |
| 11 | Krung Thai Bank Krung Thai Bank Krung Thai Bank Public Company Limited is the state-owned bank under the license issued by the Ministry of Finance.- History :The bank was incorporated on March 14, 1966 through the merger of Agriculture Bank Limited and Mondhon Bank Limited, which the government was their major shareholder... |
128,567,113,500 | Banking |
| 12 | IRPC | 123,825,000,000 | Energy & Utilities |
| 13 | Bank of Ayudhya | 111,027,284,502 | Banking |
| 14 | Total Access Communication | 99,549,804,986 | Information & Communication |
| 15 | Shin Corporation Shin Corporation Shin Corporation is one of the largest conglomerates in Thailand.- History :It was founded in 1983 as Shinawatra Computer by Thaksin Shinawatra, former Prime Minister of Thailand, and took on its current name in 1999, by using the first four letters of his last name... |
97,499,734,056 | Information & Communication |
See also
- Market for Alternative InvestmentMarket for Alternative InvestmentThe Market for Alternative Investment is a stock exchange of Thailand which was established by the Stock Exchange of Thailand in 1998 under the Securities Exchange of Thailand Act as an alternative stock market for small and medium sized enterprises. It officially commenced operation on June 21,...
(MAI) - Thai non-voting depository receipts (NVDR)