The Stock Exchange of Thailand (SET) has set a target for annual market capitalisation for IPOs and secondary offerings at a combined 550 billion baht per year to maintain market leadership in Asean.
"The target is to uphold strong market fundamentals and keep our leading position in Asean," said SET executive vice-president Santi Kiranand.
"If we do not add a new supply [of IPOs and secondary offerings], the price of our market will increase and this will not attract investors."
There have been 24 newly listed companies that launched IPOs this year, with a total market capitalisation of around 250 billion baht.
There are 15 companies in the IPO pipeline, making 39 the maximum possible this year, with market capitalisation of new IPOs likely to reach 320-350 billion baht, exceeding the bourse's target of 280 billion.
Mr Santi said there are 25-30 companies in the pipeline for new IPOs, including major deals slated to launch over the next couple of years.
"The SET index, which has broken 1,700 points, helps support market sentiment for new IPO deals. The capital market is another tool for companies to raise funds," he said.
"Businesses who believe that listing on the stock market is a solution to help them grow regionally and globally will be upgraded for criteria such as corporate governance and information disclosure."
The Thai bourse is a regional market leader in terms of daily average trading value, which stands at 46-47 billion baht. Such value passed 50 billion baht since the end of September as the SET broke 1,700 points.
"The actual price-to-earnings [P/E] ratio is 16 times the current SET index, but we believe the index is based on strong market fundamentals because of the market turnover ratio, which is less than 70%," said Mr Santi.
This differs vastly from over two decades ago when the Thai bourse reached an all-time high at 1,753.73, but market fundamentals were weak then as the turnover ratio was above 120%, he said.
Mr Santi said turnover is a trade value comparable to total market capitalisation. Apart from a rise in P/E ratio, turnover ratios higher than 100% imply trading volume exceeds the existing supply and investors are trading without much regard to the fundamental quality of stocks.
The SET is seeking new supply, such as IPOs, secondary offerings, and real estate investment trusts to keep market turnover ratio under 100%.
SET president Kesara Manchusree said the SET is arranging a new investment class called IPO Focus, which is a partnership between financial advisers, auditors, and lawyers to educate prospective listed companies on the capital market.
"This will help companies manage their expectations and know what they should and should not do as the capital market is not the place to benefit from merely raising funds or higher share prices. They must also have transparency, good governance, and be responsible for related parties, including investors," said Mrs Kesara.
