CEO Morning Brief

Thai Ruling Party's De Facto Chief Thaksin Outlines Steps to Revive Flagging Stock Market

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Publish date: Wed, 15 Jan 2025, 10:58 AM
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TheEdge CEO Morning Brief

(Jan 14): Thaksin Shinawatra, the de facto chief of Thailand’s ruling party, called for tighter regulatory oversight, better corporate governance, and tax incentives for long-term equity investors to revive confidence in the country’s flailing stock market.

The two-time prime minister and father of incumbent leader Paetongtarn Shinawatra, Thaksin said the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand should play a more proactive role in rebuilding confidence dented in recent years by a series of corporate scandals. He also said it is time for the bourse to review the high frequency trades that benefited none besides generating trading volume.

“Trust, confidence and sentiments are not great in the Thai market now,” Thaksin said at a dinner-talk organised by Thai-language newspaper Kao Hoon. “We need to bring back trust and confidence.”

Thailand’s US$490 billion (RM2.21 trillion) stock market has underperformed most of its Southeast Asian peers in the past year, as foreign investors headed for exit over concerns of a series of corporate scandals, illegal short selling and lacklustre performance of listed companies as the economy remained sluggish. Political uncertainties have also accelerated investor exodus. The Stock Exchange of Thailand is down 3.3% so far this year, with HSBC lowering the market to 'underweight' last week, saying there are limited positive catalysts.

Foreign funds have been net sellers of Thai stocks in the past two years, pulling out about US$9.6 billion, according to data compiled by Bloomberg.

The Thai stock exchange along with the markets regulator have taken a number of measures including mandatory registration for high-frequency traders and tighter disclosure norms to curb the so-called naked short selling of stocks. They have also turned to law enforcement agencies to crack down on perpetrators of corporate frauds, including at listed companies such as Energy Absolute Pcl, Stark Corp and More Return Pcl.

But Thaksin said many companies and regulators have been slow to react to frauds, eroding confidence of foreign investors in the Thai market. The SEC and exchange should enforce the rules strictly “to keep the house clean”, he said.

While Thaksin doesn’t hold any official position in the government or in the Pheu Thai Party led by his daughter, he’s seen as wielding considerable influence on Paetongtarn administration’s policies. Many of his proposals to revive the nation’s economy have been adopted by the government.

Thaksin, a long-time advocate of cryptocurrencies, said Thailand should consider issuing stablecoins backed by government bonds to retail and institutional investors while exploring other avenues for digital currencies. Authorities are also weighing a sandbox in Phuket for bitcoin transactions in tourism-related services, he said.

Major highlights of Thaksin’s speech:

  • The Board of Investment should lure foreign companies like integrated resort operators to list in Thailand
  • Open a carbon credit trading venue to ensure better prices
  • The government should be able to cut electricity tariffs to 3.70 baht (48 sen) per unit, and low power prices should become an incentive for attracting foreign investments in data centre operators and artificial intelligence infrastructure
  • Invite private and foreign companies to invest in a sea reclamation project to prevent Bangkok from further sinking with 99-year lease contracts
  • The Bank of Thailand should be talking to other stakeholders
  • Thaksin sees a gross domestic product growth rate of more than 3% this year, 4% in 2026, and 5% in 2027
  • Thailand needs to build more infrastructure for the benefit of foreign tourists
  • The Finance Ministry is in the process of setting up an infrastructure fund that will pave the way for the introduction of a flat commuter fare of 20 baht on Bangkok’s electric trains by October
  • The ministry also weighing the pros and cons of proposals to lower personal and corporate income taxes and increasing value-added tax

Uploaded by Tham Yek Lee

Source: TheEdge - 15 Jan 2025

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