SET-listed firms are expected to channel their investments for the remainder of this year into neighbouring countries with positive economic growth prospects by using both corporate earnings and commercial bank loans, says a Stock Exchange of Thailand executive.
Firms interested in expanding their businesses overseas include those in commerce, household and office equipment, fashion, electronics, mining, life and non-life insurance, transport and logistics, said Pakorn Peetathawatchai, senior executive vice-president at the SET.
The majority of businesses will expand into Cambodia, Laos, Myanmar and Vietnam, he said.
Mr Pakorn said listed firms planning to expand have expressed interest in mergers or joint ventures with local companies. These businesses include construction, commerce, energy, medical and healthcare, mining, transport and logistics firms.
Sources of investment funding for business expansion are corporate earnings, commercial bank loans and corporate bond issuance.
Meanwhile, certain listed firms are expected to expand operations into Thailand's provincial areas. They are building and materials, life insurance and non-life insurance, and paper and printing firms. Those in commerce, household and office equipment, fashion, electronics and mining have no plans to expand domestically because of concerns over tepid private consumption.
The expansion plans are derived from a CEO survey conducted jointly by the Thai Capital Market Research Institute, Thai Listed Companies Association, and Thailand Securities Depository Co Ltd. The survey represents 119 listed companies gauged between June 30 and Aug 4 this year, making up 38% of SET market capitalisation.
The liquidity of listed firms has declined slightly because of lower sales revenue from foreign partners and delays in payment of goods and service of clients.
"Listed companies have more problems with financial management including short-term and long-term coverage of bank loans because of economic slowdown in neighbouring countries," said Mr Pakorn.
Some 79% of listed firms with exposure to overseas investment risks have increased currency hedging management to reduce foreign exchange volatility. The favoured tools are forward and options contracts followed by natural hedging and opening non-resident accounts.
