Daily average trading value dropped to the lowest level in four months, after reaching its highest level in 27 months in October 2009. However, it was higher than in November of last year. While the number of trading accounts continued to rise, trading value per account slightly dropped over the past month. In the derivatives market, gold futures’ daily average trading volume doubled over October levels, making a new high in response to increasing gold prices.
In Q3/2009, listed firms’ overall operating performance improved year-on-year, but decreased over the previous quarter. This drop was due to temporary factors in the Resources Group. If we exclude companies in this Group, total net profits of listed companies continued to expand in accordance with the overall economic recovery.
1. Performance Overview: Thai vs. regional exchanges
As of end-November 2009, most exchanges’ Indices increased as a result of foreign funds flowing into the region. However, SET Index rose only 0.56% from October 2009, which was rather low compared to other regional exchanges. This is due to concerns about environmental factors in Map Ta Phut Industrial Estate and over the political situation even though economic indicators in Q3/2009 showed sustained economic recovery. The smaller increase in SET Index performance relative to other regional exchanges’ indices resulted in a slight drop of the proportion of SET’s forward P/E ratio to MSCI Ex. Japan’s forward P/E ratio in November, after rising continually since the beginning of 2009.Meanwhile, SET’s dividend yield remains at a high level compared to those of other regional exchanges.
2. Summary of Thai capital market performance
In November 2009, the SET Index fluctuated significantly. At the beginning of the month, SET Index rose along with those of other exchanges in the area, reaching a high point for the month of 717.90 on November 11. During the latter half of the month, however, the Index decreased due to concerns over the environmental impact of projects at Map Ta Phut Industrial Estate and domestic politics. As of end-November 2009, SET Index closed at 689.07, an increase of just 0.56% over the previous month. Meanwhile, the Market for Alternative Investment (mai) Index closed at 212.01, an increase of 0.99% over the previous month, which marked its third consecutive month of rises.
As of end-November 2009, SET and mai market capitalization was at THB5.55 trillion (approx. USD167.46 billion), an increase of 0.67% over October 2009.
3. Trading Activity
Daily average trading value of SET and mai in November 2009 was at THB18.95 billion (approx. USD572.13 million), its lowest value in the four months since the THB17.82 billion (approx. USD537.93 million) of July of that same year. Even at such a low level, the November 2009 amount was a massive 72.7% jump over that of a year ago.
While local retail investors took the highest share of trading activity in November 2009, at 55% of total trading value, foreign investors and securities companies expanded their share of trading. Foreign investors’ share increased to 22.5% of total trading value (from 19.5% in October 2009), while the share of securities companies rose to 15.5% of total trading value (from 11.9% in October 2009).
Local retail investors and local institutional investors were net buyers this month, while proprietary traders and foreign investors were net sellers. This month, foreign investors changed to be net sellers of THB13.24 billion (approx. USD399.62 million), after being net buyers for eight consecutive months. However, from January to November 2009, foreign investors still had a net buy position of THB42.48 billion (approx. USD1.28 billion), compared to their net sell position of THB162.36 billion (approx. USD4.90 billion) in the whole year 2008.
Turning to trading value by industry group, trading in the Resources and Agro-Industry Groups rose, while those of Banking and Property Development dropped. Trading value in Resources Group soared to 34% of total trading value in November 2009 from 27% in previous month, while trading value in the Agro-Industry Group rose to 6% of total trading value in November 2009 from 4% in previous month. On the other hand, trading value in Banking slightly decreased to 22%, while Property Development dropped the most, to 7% from 12% in the previous month.
Trading value by market capitalization became more concentrated, with securities of the top ten highest market capitalization (SET10) accounted for 44% of the value of all trades, up from 36% in October 2009.
4. Active trading accounts
The number of active trading accounts kept rising in October 2009 with a total of 145,727 accounts, up 27% over the year from October 2008, while active rate accounted for 26.1%. The average trading value per account slightly decreased: THB3.9 million (approx. USD117,721) in October 2009, vs. THB4.0 million (approx. USD120,740) in September 2009. However, it was a rise of 40% comparing to the trading value per account in October 2008.
5. Overview of the derivative market
In November 2009, gold futures reached an all-time high since the start of trading in February 2009, in addition to having risen for three consecutive months. In November 2009, a daily average trading volume reached 3,841 contacts due to rising gold prices.
This month, derivatives market’s daily average trading volume was at 16,669 contracts, up 4% month-on-month, as a result of the rise in gold futures’ trading volume (which rose 117% from October 2009), while trading volume of other futures products dropped.
6. Overview of funds raised
In November 2009, listed companies raised a total of THB1.04 billion (approx. USD31.45 million) from the capital market, consisting of THB286.5 million (approx. USD8.65 million) funds raised via IPOs of Jubilee Enterprise PCL (JUBILE) and Nation Broadcasting Corporation PCL (NBC) and THB755.5 million (approx. USD22.80 million) was raised through seasonal equity offerings (SEOs). Tanayong PCL (TYONG), at THB383.1 million (approx. USD11.56 million), was a major fund-raiser via SEO.
Special Topics
1. Overview of listed companies’ operating performance for Q3/2009
Listed companies’ operating performance for Q3/2009 (excluding companies in the Non-Performing Group and Property Funds) 21% improved y-o-y, with net profits of THB113.2 billion (approx. USD3.42 billion) and 350 out of 436 companies making net profits. However, Q3/2009's net profits dropped by 10.38% over Q2/2009, because the net profits of the Resources Industry Group plummeted. This drop was due to a decrease in both refinery prices and profits from inventory, including reserve for damages at some companies' oil sites. If we exclude the Resources Group, listed companies' total net profits in Q3/2009 was THB73.2 billion (approx. USD2.21 billion), a 5.26% rise over Q2/2009.
In terms of operating efficiency (excluding companies in the Financials and Non-Performing Groups, and Property Funds), return on equity (ROE) rose to 3.31% (y-o-y) vs. the 2.47% of Q3/2008, but a drop (q-o-q) from the 3.82% of Q2/2009. However, if we exclude the Resources Group, ROE rose both on a y-o-y and q-o-q basis.
In terms of capital structure, the overall debt to equity ratio (D/E ratio) slightly rose to 1.18, which was in the mid-range of 1.02-1.28 recorded during 2004-2008. Liquidity improved, with net cash outflows at THB6.65 billion (approx. USD0.20 billion), decreasing both q-o-q and y-o-y due to an increase in net cash inflows from operations.
For an overview of investments (excluding the Financials and Non-Performing Groups, and Property Funds), 343 companies, or 91.22% of total listed firms invested in fixed assets, while Q3/2008 and Q2/2009 listed companies invested in fixed assets accounted for 85% and 88.27%, respectively, of total listed firms. This reflects that increasing numbers of firms are investing in fixed assets, perhaps reflecting growing confidence in the improved economic outlook for next year. Investment in fixed assets totaled THB93.48 billion (approx. USD2.82 billion); the industry group with the most fixed assets investment was the Resources Group, accounting for 62.08% of total investment.
2. The Thai capital market’s plan for “Social Responsible Investment”
SET, the Securities and Exchange Commission and Federation of Thai Capital Market Organization have established a working group to develop “Social Responsible Investment”, to develop investment that does not only search for financial returns but also place importance on social and environmental return. Analyzing this type of investment will not consider only on the company’s operating performance, but will include a “Social Responsible Investment” Index, which will reflect the company’s vision for its long-term stability and Thai capital market development.
The initial steps are as followed:
- Developed SRI Guidelines to analyze investments that consider environmental, social and governance criteria. The working group has finished drafting the SRI Guidelines and proposed them to the CSR Club for preliminary consideration. The working group is designing a survey for the parties involved. The SRI Guideline will be tested on a pilot project next year, in order to consider all issues before announcing the effective date.
- Started to compile information on listed companies as the basis for establishing a SRI Fund.
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