Fitch: Volatile Stock Market, Strong Competition Pressure Thai Securities Firms

Stocks and Financial Services Press Releases Monday November 30, 2015 15:06
Bangkok--30 Nov--Fitch Ratings
Weakening economic conditions and volatile stock market would prove challenging for Thai securities companies in 2016, Fitch Ratings says in a new special report.

Brokerage income formed 68% of Thai securities companies' total revenue in 2014. As a result, volatility in securities trading volume would directly impact the companies' earnings. Furthermore, related business such as investment banking, margin loans, trading and asset management are also likely to be affected by stock market conditions.

The securities industry in Thailand remains highly competitive and fragmented with the top 10 companies accounting for about 50% of traded value during the first nine months of 2015. Competition is likely to continue increasing in the near to medium term as the barriers to entries are low. Nevertheless, Fitch expects securities companies' ratings in Thailand to remain largely unchanged in the near term despite the challenges. This is because the companies' ratings remain underpinned by group support (for securities subsidiaries) and long-established franchises with sound financial strength (for independent securities companies).

Fitch applies two rating approaches in rating securities companies in Thailand. The first approach is based on the agency's expectation that the companies will receive extraordinary support from their parents, if needed. The second approach is based on the companies' standalone profiles.

The special report "Thailand's Securities Companies – Strong Competition, Muted Environment Keep Pressure on Earnings" is available at www.fitchratings.com or by clicking the link in this media release.

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