LA ACTIVIDAD CELULAR EN MÉDULA: HEMATOPOYESIS Y

The performance of the Thai stock market can be analysed from various aspects. The first view is in terms of the market size. The SET Index’s monthly close since the establishment in April 1975 until December 2014 are plotted in Figure 1, and the measurement of the market size by market capitalisation from 1988 are shown in Figure 2, while the major events affecting the Thai stock market are listed in Table 2.

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Figure 1: Monthly SET Index (April 1975 – December 2014)

Source: Stock Exchange of Thailand

Figure 2: Annual SET Index and Market Capitalisation (1988 –2014)

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Table 2: Major Events affecting the Stock Exchange of Thailand during 1975-2014

Apr 1975 First trading day of the SET on 30th April 1975

Mar 1976 SET Index closed at historical low at 76.44 points on 17th March 1976

1979 Oil crisis

1981 Global liquidity squeeze and high interest rate

Apr 1981 Coup d'état

Sep 1985 Coup d'état

May 1986 Dissolution of parliament

Oct 1987 Black Monday

1989 Speculation in real estate market

Oct 1989 Mini Black Monday

Aug 1990 Persian Gulf War

Feb 1991 Coup d'état

May 1992 Public demonstration leading to the Black May incident

Jan 1994 SET Index was at its all-time high closing price at 1753.73 points on 4th January 1994 with a price-earnings ratio of 31 times

Jan 1995 Mexican peso crisis

Feb 1995 Losses in derivatives investment by Baring Securities Singapore

1997 Asian Financial Crisis

Jul 1997 Thailand abandoned the currency peg regime and adopted a managed float system

Aug 1997 Granted IMF Reform Package Dec 1997 Closure of finance companies

Sep 1998 SET Index closed at the second lowest level in the history at 207.31 on 4th September 1998

Mar 1999 Introduction of economic stimulation measures

Aug 1999 Measures on private consumption stimulation and financial institution rehabilitation

Jan 2001 General election

May 2001 Thai market underweighted by the MSCL Sep 2001 September 11 attacks

Jun 2002 WorldCom scandal Jul 2002 - Apr 2003 Iraq War

Mar 2003 SARS outbreak

Jan – Dec 2003 Thailand’s economic recovery Jan – Feb 2004 Avian Influenza outbreak Feb – Apr 2004 South Thailand insurgency

Feb – Mar 2004 Demonstration against the privatisation of the Electricity Generating Authority of Thailand (EGAT)

May – Jul 2004 Increasing trends of oil price and interest rates

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Dec 2006 Introduction of the unremunerated reserve requirement (URR) on short-term capital flows by the Bank of Thailand (BOT)

Feb 2008 Lifting of the URR measure

May 2008 Public demonstrations with the People's Alliance for Democracy seizing the airport

Oct 2008 The second and third implementations of the first-stage circuit breaker after the SET Index fell by more than 10 percent during trading hours, as a result of the Subprime Crisis in the US on 10th and 27th _{October 2008.}

Nov 2008 US Federal Reserve introduced Quantitative Easing measure (QE1) Feb 2009 Thailand’s Administrative Court suspended the development of

sixty-five projects in the Map Thaput Industrial Estate, worth an estimated US$8 billion, due to inadequate health impact assessments May 2009 The Government of Dubai requested for delayed debt repayments of

Dubai World company

Mar 2010 Morgan Stanley changed recommendation for Thai stock market to overweight

Apr 2010 Emergency Decree imposed in Bangkok, Thailand’s capital city Jul 2010 Most European banks passed the stress test

Nov 2010 Second round of Quantitative Easing measure by the US Federal Reserve (QE2)

Feb 2011 Egyptian Revolution Mar 2011 Tsunami in Japan

Jul 2011 Investor confidence in the Thai market improved Oct – Dec 2011 Severe flooding in Thailand

Sep 2012 US Federal Reserve’s QE3 and the ECB’s asset purchase programme May 2013 Public demonstration against an amnesty bill in Bangkok

May 2014 Coup d'état by the National Council for Peace and Order (NCPO) From the beginning of the bourse in 1975 until 1977, the development of the SET had been rather gradual. Then, the first noticeable boom period was during 1977-1979. The number of newly listed companies rose as business owners raised funds to support the economic expansion as presented in Figure 3. However, the oil price crisis in 1979 led to high inflation, and the Thai baht was devalued in 1981. The index was consequently relatively steady during 1979-1982.

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Figure 3: Number of List Companies and Newly Listed Companies (1975 –2014)

Source: Stock Exchange of Thailand

The index then advanced during 1986-1988 as a result of a further devaluation of the Thai baht in 1984 which led to strong exports. The market gradually turned bearish after the Black Monday in October 1987. From 1990, economics policies aiming at financial liberalisation and deregulation were increasingly introduced. Volatility in the market also increased in 1990 due to the Persian Gulf War. The index was affected again by the coup d’état in 1991 and the following Black May incident, which was the clash between police and military officers and protestors leading to loss of lives and many injured in 1992. Excess liquidity in the market helped the index regained from late 1993 and saw the index reached all-time high in January 1994.

However, speculation in both real estate and stock markets, together with speculative attacks on the Thai baht led to Thailand switching from fixed currency regime to a managed floating system on 2nd July 1997, which signalled the start of the Asian Financial Crisis. The index plummeted as far 207.31 points in September 1998, before the various economic programmes led to a recovery in 2003.

Thailand had another coup d’état in September 2006. Later that year, the Bank of Thailand introduced the unremunerated reserve requirement (URR) on short-term capital flows. The measure required 30 percent of all capital inflows into Thailand to be held in non-interest

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bearing deposits at the central bank for one year. The SET Index closed at 730.55 on 18th December 2006. The URR was announced in the evening that day and led the SET Index to plunge by more than 20 percent during trading hours of 19th December 2006. The circuit breakers were triggered for the first time at both 10 percent and 20 percent stages. The Index rebounded and closed at 14.84 percent loss, marking one of the worst trading days in the SET’s history. The global crash led by the Subprime Crisis in the US resulted in circuit breakers with 30-minute trading halt being activated on two occasions in October 2008.

In 2011, Thailand faced one of the most severe floodings in the history. Sixty-five out of 77 provinces in Thailand were declared disaster areas, including part of Bangkok – the capital city – was inundated. The World Bank (2011) estimated this flooding to be the world’s fourth costliest in 2011 with US$45.7 billion in economic damages and losses due to this flooding.

From the establishment of the Stock Exchange of Thailand 1975 until 2014, Thailand had enjoyed the compounded annual growth rate (CAGR) of 8.1 percent in nominal GDP per capita based on Figure 4. Compared to other markets, the total market capitalisation of the SET and the mai had the CAGR of 22.4 percent, while the debt market and the total credit extended by commercial banks had CAGR of 18.5 percent and 13 percent, respectively (Stock Exchange of Thailand, 2015b).

Figure 5 presented the combined total market capitalisation of the SET and the mai and comparison to the nominal GDP. Overall, it showed the Thai stock market has been growing strongly relative the economic growth and its market capitalisation represented approximately 154 percent of nominal GDP in 2014.

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Figure 4: Thailand’s Nominal GDP per capita (1975 – 2014)

Source: International Monetary Fund, World Bank, and the Office of the National Economic and Social Development Board of Thailand

Figure 5: Total Market Capitalisation (SET and mai) and Percentage of Nominal GDP (1990 – 2014)

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Next, the returns on investment in the SET is considered. Over the period of 40 years from establishment, the market had experienced various crises such as the Persian Gulf War, the Asian Financial Crisis, the dot-com bubble, and the Subprime Crisis. It yielded a CAGR of approximately 8.86 percent, while saving deposits and gold would earn 6.50 percent, and 5.62 percent, respectively (Stock Exchange of Thailand, 2015b). In other words, investing in the stock market, saving deposits, or gold for 40 years would have generated nominal returns of about 27, 11, and 8 times of the initial investment, respectively. Historical market dividend yields, price-earnings (P/E) ratios, and price-to-book-value (P/BV) ratios were also reported in Figure 6, Figure 7, and Figure 8.

Regarding liquidity, the SET’s average daily total turnover and foreign investors’ turnover were displayed in Figure 9. Participation of foreign investors in the SET have been significant in terms of percentage of total turnover shown in Figure 10. It represented roughly between 20 to 30 percent of transaction value by all types of investors. The position of foreign investors also appeared to somewhat correlate with the performance of the SET. This is illustrated in Figure 11.

Finally, the number of listed companies and the total market capitalisation by industry group demonstrated the level of concentration in the SET. They can be referred to from Figure 12 and Figure 13.

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Figure 6: SET’s Monthly Market Dividend Yield (1975 – 2014)

Source: Stock Exchange of Thailand

Figure 7: SET’s Monthly Price-earnings Ratios (1975 – 2014)

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Figure 8: SET’s Monthly P/BV Ratios (1975 – 2014)

Source: Stock Exchange of Thailand

Figure 9: Average Daily Turnover in the SET (2004-2014)

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Figure 10: Transactions by investor type in the SET during 2004- 2013 (%)

Source: Stock Exchange of Thailand

Figure 11: Monthly Foreign Net Buy (3-month Moving Average) and the SET Index (2001 –2014)

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Figure 12: Listed Companies by Industry Group (As of December 2014)

Source: Stock Exchange of Thailand

Figure 13: Total Market Capitalisation by Industry Group (As of December 2014)

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