In the coming years, the SET will adapt its business structure to transform to a partnership platform format that drives “inclusive growth” for new tech startups, president Pakorn Peetathawatchai told a seminar on “Creating New Frontier of Capital Markets” last Friday.

The SET will introduce new projects and platforms to support tech startups such as Launchpad and Investment Vehicle for Enterprises (Live). The latter is a platform to bring together startups, investors and sponsors and was launched earlier this year under “Live Fin Corp”, a subsidiary company of SET.

In this platform, startups seeking investment capital can meet with investors willing to contribute to crowdfunding startup businesses. The platform also aims to create an investor community so that retail investors are informed about various startup businesses as well as the opportunities and risks of investing in them, says Pongpiti Ektheinchai, managing director of Live Fin Corp.

The number of Thai startups funded through active angel investments, venture capital, and corporate venture capital has been increasing rapidly in recent years. In 2012, only three funded startups in Thailand were officially recognised by Techsauce. This increased to 50 in 2015, 75 in 2016 and 90 in 2017, according to the Thailand Tech Startup Ecosystem Report Q2/2018 from Techsauce.

“We expect to see at least 100 funded startups in 2018,” says Pongpiti.

Meanwhile, the SEC faces various legislative challenges as the market landscape shifts due to the introduction of technological disrupters.

Many in Thailand’s ageing population are seeking to invest in affordable real-estate assets in order to secure a stable source of income as they go into retirement.

As well, the tokenisation of assets is a growing global trend that is now emerging in the Thai market, allowing middle-income investors to invest in a fraction of an otherwise unaffordable asset and become a “fractional owner” of the asset, says Achari Suppiroj, director of the fintech division of the SEC.

For example, instead of purchasing a whole building, investors can purchase tokens that represent a fraction of the asset, she says.

However, there are still legislative obstacles obstructing the advancement of asset tokenisation in Thailand.

For example, it is still legally ambiguous as to whether an asset token falls under the legal regulations of a property asset or that of a digital asset, she explains.

Achari also expressed her concern over Thailand’s regulation of initial coin offerings (ICOs). ICOs are a fundraising method for cryptocurrency companies similar to initial public offerings (IPOs). However, they have been used by cryptocurrency companies to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.

By passing regulatory laws on ICOs, Achari sees a risk that Thai cryptocurrency startups may be discouraged and choose to instead launch ICOs in other countries.

This may in turn hinder the development of a digital ecosystem within Thailand’s economy. The challenge for the SEC is to strike a balance in its regulatory framework so that cryptocurrency startups are not discouraged and investors also feel safe investing in ICOs, she said.

Magazines and newspapers are only two media categories posting a decline in ad spending during the month.

Advertising spending on magazines dropped dramatically by 35.95 per cent year on year to Bt98 million in October, while advertising spending on newspapers declined 7.34 per cent to about Bt530 million.

In-store media enjoys the highest growth of 265.22 per cent year on year to about Bt84 million in October this year, following by television, which posted a strong growth of 146.4 per cent to about Bt5.92 billion. Radio chalked up a high growth of 95.98 per cent to Bt439 million while Internet gained 87.06 per cent to about Bt159 million.

Transit media showed rise of 53.45 per cent year on year to about Bt534 million in October, followed by cable and satellite television, which posted a 31.14 per cent increase to Bt219 million in October. Outdoor media posted a 22.81 per cent climb to Bt603 million in October, followed by cinema, which posted the lowest growth of 17.21 per cent to about Bt606 million.

Total advertising spending in the first 10 months of this year however increased only 4.41 per cent year on year to about Bt87.55 billion.

Magazine showed the highest decline of 34.88 per cent year to date to about Bt1.07 billion, followed by newspapers’ drop of 21.32 per cent to Bt5.03 billion while cable/ satellite television, saw a decline of 17.54 per cent to about Bt2.05 billion.

In-store media enjoyed the highest growth of 13.14 per cent in the first 10 months of this year to about Bt861 million, followed by outdoor media, which posted growth of 9.34 per cent to about Bt5.69 billion.

Television posted growth of 8.86 per cent to about Bt56.55 billion in the first 10 months. Internet grew 8.58 per cent to about Bt1.35 billion, followed by radio’s growth of 7.82 per cent to Bt3.91 billion.

Cinemas posted an increase of 7.41 per cent in advertisng revenue to Bt6.04 billion in the first 10 months, while transit media had the lowest growth of 1.64 per cent to about Bt4.95 billion.

Our main rationale is not the meeting between US President Donald Trump and Chinese President Xi Jinping during the G20 meeting at the end of this month, but China’s upcoming massive tax reform initiative.

Next year, the Chinese government plans to roll out massive income tax cuts for both corporates and individuals. Meanwhile, China’s monetary policy remains on an accommodating path, as seen from the repeated easing of banks’ reserve requirements this year. The PBOC or the China central bank estimates that the government tax cut could boost China’s gross domestic product growth by more than 1 per cent.

We believe the decline of the Chinese equity market should provide a good opportunity to accumulate decent stocks with solid fundamentals that are undervalued. In this regard, we recommend two exchange-traded funds listed in Hong Kong that invest in Chinese stocks: (1) “Mirae Asset Horizon MSCI China ETF”, which tracks the “MSCI China Index” comprising 139 key Chinese stocks; and (2) “Mirae Asset Horizons CSI 300 ETF”, which tracks the “CSI 300 Index”, comprising 300 key Chinese stocks listed on the Shanghai and Shenzhen exchanges. –|Thanawat Patchimkul, Head of Research, DBS Vickers Securities (Thailand)

Sideways movement

The Thai stock market has been moving with higher volatility, swinging in a range of 1,656-1,688 points, amid the US mid-term election and the third-quarter earnings results of listed Thai companies. Exports and tourism are expected to recover, supported by the government’s stimulus.

The Bank of Thaland’s Monetary Policy Committee is expected to leave the policy rate unchanged at its November 14 meeting following the slowdown in last month’s economic figures. The election date tentatively set for February 24 has now been confirmed and a new Cabinet will take office in June.

This week, the SET Index will likely move sideways in a range of 1,660-1,685 points due to a combination of negative and positive factors.

Investors need to keep a close watch on bond yields, the US dollar appreciation and corporate earnings results.

Possible sell-on-fact could prevent stock rises. We prefer stocks with particular positives such as BTS, which could gain from bidding for state-projects. We also like to hold ANAN and COM7 until their earnings results. Despite sell-on-fact on MTC, it could be selected as one of the stocks in MSCI on November 13. We suggest sell on NYT after its recent increases. BTS’ technical fair price is Bt9.80.– Tisco Securities

Index under pressure

The SET Index is forecast to swing in a range of 1,600-1,700 points for the rest of this month under pressure from: 1) consistent retreats of global crude prices; 2) appreciation of the US dollar and US bond yields after the Fed statement. The markets weight more on the expected US rate rise next month. We suggest “hold” on existing portfolios, not to add new ones until market valuation turns attractive.

A split of the US Congress after the mid-term election could result in: 1) Easing of US dollar and bond yields, given increased difficulty for the US to drive pro-growth policies such as tax reduction. Emerging-market currencies could strengthen; 2) Gradual improvement in the investment environment in emerging markets, as Trump will likely take a less-aggressive position on sensitive issues, including the trade war with China; 3) six to seven per cent rise in stock markets around the world based on our empirical study since 1900.

Oil: The global crude prices will likely move sideways in the short-term after the increase in US crude stock by 5.7 million barrels, according to its latest weekly report and the US permission for eight countries to import oil from Iran. – Research Department, Trinity Securities

 In the US, the ongoing removal of monetary accommodation, waning fiscal stimulus, and restrictive trade policies will start weighing on financial markets and economic activity, the company said.

Other advanced economies will also see cyclical moderation towards trend growth. Slowing global trade will have an adverse impact on open economies including Japan, South Korea and Germany.

“We expect global growth to slow to under 3 per cent in 2019 and 2020, from an estimated 3.3 per cent in 2017-18. Real growth in G20 advanced economies will decelerate from around 2.3 per cent in 2018 to 1.9 per cent in 2019 and 1.4 per cent in 2020,” the research company said.

“Growth in G20 emerging markets will decline from an estimated 5 per cent in 2018 to 4.6 per cent in 2019, followed by a pick up to 4.9 per cent in 2020. Contractions in Turkey and Argentina, as well as slowing in China, will pull down aggregate G20 emerging markets growth in 2019.

“Gradual quantitative tightening by major central banks will continue to have large spillover effects outside the currency areas. As major central banks start to rescind forward guidance and withdraw monetary accommodation, global financial volatility, term premia and credit spreads will gradually rise.“

Moody’s said: “Our baseline forecasts assume that this will happen relatively smoothly, occasionally interrupted by bouts of financial market volatility resulting from portfolio rebalancing by international investors.

However, the possibility of a sudden and disorderly snap back in medium- to long-term interest rates is a major risk to global growth.

The company said trade and geopolitical disputes between the US and China will worsen in 2019. The United States-Mexico-Canada Agreement (USMCA) will likely be ratified in 2019, with agreement on rules of origin, conflict resolution, agriculture and government procurement.

“In contrast, we expect that the US-China trade conflict is unlikely to be resolved any time soon. We assume that the recently imposed tariffs on $200 billion worth of Chinese goods will likely rise from 10 per cent to 25 per cent in January 2019, as announced,” Moody’s said.

“In both countries, the overall direct macro impact on growth will be manageable. However, persistent and broadening tensions between the two largest economies globally are increasingly likely to have widespread negative implications by undermining investment globally.”

Siri Jirapongphan, energy minister, said that Chevron Corp and PTT Exploration and Production Plc (PTTEP) passed the requirements on legal qualifications of petroleum operators, and have proposed the principles and conditions for state units to co-invest in the projects. They have also submitted plans for preparation, survey and petroleum development.

The government will select state units with financial strength to join in the 10-year concessions given the investment in Erawan and Bongkot fields is worth about Bt1.1 trillion.

Under the condition, it is not limited for one state unit to hold a stake in the two fields or one state unit to hold a stake in one field and “we do not ask bidders to propose the list (of state units) but will offer all state units the opportunity for co-investment. “The state will consider all interested parties ” Siri said.

In the Erawan concession, a joint bid from PTTEP Energy Development and its partner MP G2 (Thailand) Ltd faced a rival bid from Chevron Thailand Holdings Ltd and its partner Mitsui Oil Exploration Co Ltd.

Solo bid

PTTEP Energy Development submitted a solo bid for the Bongkot concession to compete with a joint bid from Chevron Thailand Holdings and Mitsui Oil Exploration. Based on the selection criteria, 65 per cent of total score involves low gas price, 25 per cent for profit-sharing with the state, 5 per cent for bonus to the state and 5 per cent for employment of Thai workers.

Earlier, the department of Mineral Fuels expected development of the Erawan and Bongkot fields will contribute about Bt800 billion to the state in the forms of royalty fees, petroleum income tax and profit sharing and emply 80 per cent of the workforce locally and at least 90 per cent in the fifth operation year.

Moreover,  the current import volume of 22 million tonnes of liquefied petroleum gas worth about Bt460 billion will be reduced.

The Erawan gas block will expire on April 23, 2022, while Greater Bongkot North field |and Greater Bongkot South |concession will expire on April |24, 2022 and March 2023, respectively.

Based on the terms of reference, the Erawan gas field is required to produce 800 million cubic feet of natural gas a day and the Bongkot field is required to produce 700 million cubic feet daily for the first 10 years of the 20-year contracts which can be extended for another 10 years.