Thailand Challenges Singapore to Hong Kong With Foreign IPO Plan

Thailand will allow initial public offerings of foreign companies for the first time as Asia’s 11th-largest equity market seeks to compete with Hong Kong and Singapore as a regional hub for stock listings.

Several Chinese companies have already expressed interest in selling shares in Thailand, and rules for the offerings will be announced this quarter, Vorapol Socatiyanurak, the secretary general of Thailand’s Securities & Exchange Commission, said in an interview in Bangkok yesterday.

While Thailand’s $341 billion equity market is about a tenth the size of Hong Kong’s, growing interest in stocks from the Southeast Asian nation’s 67 million people led them to pour $2.7 billion into the market last year. The benchmark SET Index trades at a valuation premium over the Hang Seng Index and Singapore’s Straits Times Index, even amid anti-government protests that spurred Prime Minister Yingluck Shinawatra to declare a state of emergency in Bangkok yesterday.

“Thailand wants to compete with Singapore and Hong Kong to become one of Asia’s funding centers,” Vorapol said. “Thai investors are also in desperate need for new stocks and investment alternatives for their savings.”

The regulator will also allow trading of depository receipts linked to large foreign companies such as Apple Inc. and Google Inc., Vorapol said. Thai companies, property funds and infrastructure funds raised about $5.8 billion through IPOs last year, the most since Bloomberg began compiling the data in 1993.

Myanmar, Laos

The SET index has slipped 0.4 percent this year amid violence in Bangkok that injured at least 70 people since Jan. 17. Political tension is increasing as Suthep Thaugsuban, a former opposition party lawmaker, steps up efforts to oust Yingluck before an election scheduled for Feb. 2.

Thailand will require foreign companies seeking Bangkok listings to have at least two Thai citizens on their boards, Vorapol said. Financial statements must be endorsed by auditors who are certified by the local regulator, he said.

Policy makers will promote Thailand as a funding destination for nearby countries with less-developed capital markets such as Laos, Myanmar and Cambodia, Vorapol said. Thailand is in talks with Myanmar’s finance ministry on the sale of baht-denominated bonds to Thai investors, he said.

Relative Value

Hong Kong’s exchange, long a listing destination for Chinese companies, has broadened its reach in recent years to include Moscow-based United Co. Rusal and Milan-based Prada SpA. Singapore has lured companies from China, Malaysia and the Philippines.

Thailand’s SET gauge is valued at 14 times reported earnings, while the Hong Kong index trades at 10 times and Singapore’s measure has a multiple of about 13, according to data compiled by Bloomberg.

While Thailand has made strides in developing its capital markets, the country still has more work to do before catching up with larger regional competitors, according to Viravate Vongkitbuncha, head of the international securities department at SCB Securities Co.

“The regulator has taken a lot of development steps,” Viravate said. “It’s going in a good direction.”

Before it's here, it's on the Bloomberg Terminal.