News Column

Unrest hampers IPO schedule

February 7, 2014

By Nuntawun Polkuamdee, Bangkok Post, Thailand



Feb. 07--The ongoing political tensions, which some fear could last for six months, are taking a toll on initial public offerings (IPOs), with 25 companies having postponed their fund-raising plans until the situation eases, says the Stock Exchange of Thailand (SET).

But the bourse is still maintaining its goals for a market cap from new IPOs at 210 billion baht and public offerings (POs) at 180 billion baht this year, said president Charamporn Jotikasthira, adding that the SET should rebound quickly once the political problems are resolved.

The ongoing political stand-off, however, is partly to blame for the sharp decline in the SET's average daily trading value to 31 billion baht year-to-date, down from 50 billion baht in 2013.

Mr Charamporn said the SET remains attractive because of its low price-earnings ratio of 11.8 (compared with regional peers' 13-15) and a low debt-to-equity ratio of 1.4.

Given the local political unrest, the SET has delayed its six international roadshows until the situation clears and has also postponed a mini-Thailand focus event from January to August.

"The Thai stock market has felt a double impact from both global and local factors, so there has been thin trading volume and foreign investors continue their selling spree," said Mr Charamporn.

Foreign funds are flowing out of emerging markets and into developed markets, and currency depreciation in Turkey, Argentina, India and Indonesia has put pressure on other emerging-market currencies. Countries with low foreign reserves and a current account deficit will be more vulnerable than those with large reserves.

Global factors have hurt the Thai stock market less than other emerging markets, thanks to solid economic growth, high foreign reserves and subdued inflation.

The SET index has fallen 1.4% this year, outperforming Singapore (-6%) and Malaysia (-4%).

Executive vice-president Pakorn Peetathawatchai said foreigners have singled out Thailand as an at-risk country because of political instability, but he noted the country has low public debt to GDP and thus no default risk.

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(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)


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