Benefits of ASEAN Exchanges in Thailand Rinrada Chaovalit (Dada) G.

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Benefits of ASEAN Exchanges in Thailand

Introduction

Over the past fifty years, the Association of Southeast Asia Nations, ASEAN, has 10

countries that were under pressure from financial crises thoroughly. Integration of ASEAN

economies helped to strengthen countries positions in global economies. To improve financial

status and to raise the ASEAN capital market, ASEAN Exchanges is a part of ASEAN Capital

Market Integration that is established from the agreement of ASEAN leaders in the 12th ASEAN

Summit (ASEAN bourses expect to start cross-border trading in 2012, 2011). The approval

concluded that ASEAN countries will cooperate and urge to raise funding movement between

provincial and develop ASEAN to be the provincial where funding movement will be freely within

2015. ASEAN securities in ASEAN Exchanges are a corporation of seven exchanges consisting of

Indonesia Stock Exchange (IDX), Bursa Malaysia (MYX), Philippine Stock Exchange (PSE),

Singapore Exchange (SGX), Stock Exchange of Thailand (SET), Ho Chi Minh Stock Exchange

(HOSE), and Hanoi Stock Exchange (HNX) that aim to raise the ASEAN capital market consisting

of 180 ASEAN Stocks representing the top 30 of each country. This collaboration is attractive for

foreign investors to invest in ASEAN Exchanges and leads to greater investment opportunities.

Moreover, ASEAN trading link will combine many stocks from countries in ASEAN to promote

ASEAN investment changeability among mediators. In the past, Thailand faced failures of liquidity

in the economic system, pressure on the currency and the distress of exporters. The advantages from

ASEAN Exchanges are providing more convenient to Thai investors, fund and liquidity in the

market exchanges increased, and investors receive high compensation and dividend from trading

stock in ASEAN countries. However, the growth of Thai securities still experiences sluggishly in

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Benefits of ASEAN Exchanges in Thailand Rinrada Chaovalit (Dada) G.11-7
ASEAN Exchanges and provides less interest and dividend to investors. Fortunately, the ASEAN

trading link helps to raise the rate of trading growth and affects in receiving high-interest from

investors. Overall, ASEAN Exchanges brings more benefits than drawbacks to Thailand since it

selects major businesses to trade in ASEAN Stars.

Convenience and Alternatives of ASEAN Exchanges

ASEAN Exchanges gives more convenient and alternatives for both domestic and foreign

countries in investment in foreign securities for Thai investors. ASEAN Trading Link is suitable and

increases more efficient in trading securities. Dr. Veerathai Santiprabhob, the deputy manager in

planning strategies at Stock Exchange of Thailand, claimed in Bangkok Business Newspaper that

cooperation of ASEAN Exchanges will bring the prominent points of stock markets in each country

since they selected especially influential companies for trading that also help people in other

countries to consider for trading stocks easily. In 2011, the number of Thai investors spending in

foreign direct investment or FDI in ASEAN increased to 30% comparing to the year that did not

have ASEAN Exchanges (as cited by Vijitmethavanich, 2013). This phenomenon came from several

supporting factors such as indulgence of the criterion in foreign currency for investment in

securities through ASEAN Trading Link and public relation through Invest ASEAN project

implying more convenient that Thai investors will acquire from ASEAN Exchanges. Prof. Sorasart

Sukcharoensin (2014), Associate Dean for Academic Affairs, Graduate School of Development

Economics, National Institute of Development Administration, stated in Asean Exchanges: The next

rising star? article in Nation newspaper that Another integration worth noting is the ASEAN

Trading Link, a gateway for securities brokers to offer their clients easy access to each exchange.

Private investors can trade approximately 2,300 shares of a company in Malaysia, Singapore, and

Thailand conveniently. This has high potential to encourage the trading volume and activities

among ASEAN countries indicating many alternatives for Thai investors to invest. As a result, these

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reasons are three examples of convenience and alternatives through the investment of Thai investors

in ASEAN stocks Exchanges; therefore, these are the factors that ASEAN Exchanges brings more

benefits than drawbacks to Thailand.

Interests from ASEAN Exchanges

ASEAN Exchanges has high compensations and is ranked highly based on market value.

Investors have an opportunity in earning higher compensation and dividend that affects in

increasing Thai market value especially in energy industries. The risks of investment are decreased

in turn since Thai investors have several securities from many ASEAN countries to invest that they

can separate their fund for trading properly. Mr. Akejarin Rodjaroen (2014), the writer of

International Institute for Trade and Development (ITD), disclosed several strong points of ASEAN

Exchanges in ASEAN Exchanges: New challenge for Thai investors article. Investing in ASEAN

Exchange will increase an opportunity in receiving high compensation. Moreover, investors can

trade stocks in ASEAN countries that help to decrease the risk of investment from trading in Thai

securities only. Furthermore, capital gain, a profit from a sale of a capital asset such as stock and

bond where the sale price exceeds the purchase price, will be excepted tariffs as well as investors

invest in Thai securities. The dividend will be included to calculate to income at the end of the year

for paying taxes at the rate specified by law. Investors can gain knowledge of investment and can

choose to invest in each security suitably in the appropriate time that will disperse the risk of

investment; moreover, investors will receive high compensation from trading securities in ASEAN

countries without paying tariffs. Market researchers of Export-Import Bank of Thailand analysed

the new opportunity for attracting investment fund to the countries in AEC. Integration of ASEAN

Exchanges of 7 securities will bring the outstanding exchanges for investors. The result of this

integration is expanding chances in gathering fund for listed companies in ASEAN countries.

ASEAN Exchanges value in market price is about 2 trillion USD. Surprisingly, Thai exchanges

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have the market value in the twenty-eighth place of the world. Exchanges in energy industries are

quite remarkable from market value proportion to 30% of all Thai market values. The integration

also enlarges opportunities and disperses risks of investment. At the same time, ASEAN is

considered as the new economic community that rapidly grows and has strong economic factors.

From these reasons, this is the great opportunity for Thai investors to make profits from the

compensation of ASEAN countries. Thai market value in market price is increasing dramatically

because ASEAN Exchanges is in the ninth place of market value based on market price of the world

that also has an influence on Thai exchanges to speedily grow. The Thai prominent securities are in

the group of energy industries. The two pieces of information exemplify the causes of benefits from

ASEAN Exchanges since the first source stated about acquiring a large amount of money back from

trading securities in ASEAN countries and the second source clarified that Thai market price

exchanges rank highly in the world.

Inert Growth in ASEAN Exchanges Stimulating by ASEAN Trading Link

Thai securities undergo sluggish growth in ASEAN Exchanges and receive less interest.

Nevertheless, the ASEAN trading link helps to raise the rate of trading growth and affects in

receiving high interest from investors. Thai industrial securities are too ordinary comparing to other

countries in ASEAN. Hence, Thai and foreign investors want to invest in others security in other

countries that have an influence on sluggish trading growth. However, the ASEAN trading link

becomes the major supporter of ASEAN Exchanges that it helps to raise the rate of trading growth

for Thai securities and receiving greater attention from investors since it can provide higher

dividends. Hiromi Hayashi (2015), the writer of Nikkie ASEAN Review, stated that ASEAN

Exchanges and the ASEAN trading link must require two things which are more securities in each

country for trading in and further improvement of the widespread trading area. If all exchanges of

ASEAN members participate in the link, stocks of companies listed on one exchange will be

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allowed to be traded on any other. Therefore, there is a concern that listings could be concentrated

in a few highly liquid and reliable exchanges. As a result, some bourses could suffer sluggish

growth in the number of listed companies. The areas of bourses are still too narrow comparing to

the number of exchanges. Consequently, the rates of growth in each security are inert. Moreover,

Mr. Sophon Vijitmethavanich (2013), an economist of SCB Economic Intelligence Centre,

explained that Although investors have many alternatives to invest, they affect to investors to

select on investing in securities that provide the highest yield upon investment. The investment

proportions of equity instruments and bonds statistics in 2011 from Bank of Thailand informed that

securities in tourist industries that have yield upon investment Return On Equity: ROE just 3.4%

that less than the average of ASEAN at 11.1%. Thailand securities in some industries are less

outstanding than other ASEAN countries. Therefore, these securities will receive less interest and

have higher capital in funding. Notwithstanding, Globe Business Media Group revealed that the

ASEAN trading link is established among the stock exchanges of Malaysia, Singapore, and

Thailand that is driven by the ASEAN Exchanges. ASEAN countries have a combined GDP of US

$2.4 trillion, 5 making it the worlds 7th largest economy if it were to be regarded as a single

country. The ASEAN Exchanges would rank among the top 10 stock exchanges globally, by market

capitalization, with the potential to offer access to more than 3,000 listed companies (The ASEAN

Trading Link, 2017). There is an incentive for the expansion of the ASEAN trading link to

encompass all seven exchanges and the remaining stock exchanges in ASEAN. Therefore, ASEAN

trading link will help to increase the growth of the ASEAN financial markets. Overall, the ASEAN

trading link can urge GDP rising rapidly and expand trading link. Consequently, Thai securities will

be raised in funding and receive greater interest from investors. The two pieces of evidence above

illustrate the reasons why ASEAN Exchanges yet has disadvantages for Thailand. However, the last

proof above becomes a counterargument that undermines the two pieces of evidence. This is the

reason why ASEAN Exchanges brings more benefits than drawbacks to Thailand.
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Conclusion

In conclusion, Thai investors and industries receive more advantages than disadvantages

from ASEAN Exchanges. ASEAN Exchanges provides choices and convenience for Thai investors.

Analyses from Stock Exchange of Thailand and National Institute of Development Administration

showed that ASEAN Exchanges offers several interesting stocks for investors to make decisions

easily. Moreover, ASEAN Trading Link rises more efficient in trading securities from connecting

securities in ASEAN countries conveniently. Thai investors earn high interests and dividends. In

addition, market researchers of Export-Import Bank of Thailand disclosed that Integration of

ASEAN Exchanges increases opportunity in funding for listed companies in ASEAN countries that

affect on giving high compensations to Thai investors. Currently, the market value of Thai

exchanges ranks in the twenty-eighth place of the world. The study from Nikkie ASEAN Review

revealed there are many exchanges in ASEAN countries but listed companies can concentrate in a

few highly liquid and reliable exchanges leading to some bourses grow slowly in my listed

companies. On the other hand, Globe Business Media Group stated that ASEAN trading link help to

raise the growth of the ASEAN financial markets in ASEAN Exchanges. Hence, Thai securities will

be raised in funding and Thai investors receive greater interest. The standpoint of this essay

supports by Dr. Santiprabhob, Prof. Sukcharoensin, and Mr. Rodjaroen who agree that ASEAN

Exchanges brings numerous benefits to Thai investors and companies. ASEAN Exchanges provides

convenience with ease in trading stocks and high interest in funding investment. Moreover, ASEAN

Trading Link helps to speed the rate of growth in ASEAN securities. This position that ASEAN

Exchanges provides many benefits is significant since nowadays the number of Thai investors

increases rapidly that leads to investing in many stocks within ASEAN countries. Therefore,

investors have to perceive both advantages and disadvantages from ASEAN Exchanges for making

decision correctly.

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References

ASEAN Exchange: New opportunity attracting investment fund to the countries in AEC

(2014). Retrieved February 20, 2017 from http://www.ditp.go.th/ditp_pdf.php?

filename=contents_attach/71849/71849.pdf&title=71849

Benefits of the ASEAN Economic Community AEC (2016). Retrieved February 15,

2017 from http://aseanup.com/benefits-asean-economic-community-aec/

Hayashi, H. (2015). Stock-exchange linkup faces challenges. Retrieved February 10,

2017 from http://asia.nikkei.com/Markets/Equities/Stock-exchange-linkup-

faces-challenges

Rodjaroen, A. (2014). ASEAN Exchanges: New challenge for Thai investors. Retrieved

February 20, 2017 from http://www.itd.or.th/th/-asean-

exc/

Stock-exchange linkup faces challenges (2015). Retrieved February 10, 2017 from

http://www.lexology.com/library/detail.aspx?g=4d619017-14ce-43ab-a5d8-

a26fc14cca72

Sukcharoensin, S. (2014). Asean Exchanges: The next rising star? Retrieved February

17, 2017 from http://www.nationmultimedia.com/news/business/

EconomyAndTourism/30225228

Vijitmethavanich, S. (2013). ASEAN Exchanges. Retrieved February 10, 2017 from

https://www.scbeic.com/th/detail/product/942

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