Thailand’s capital markets are anything but sick


    HONG KONG- Thailand’s capital markets are anything but unwell. Growth is lagging most regional peers, and an aging population makes it hard for Thailand to shake off the unwelcome “sick man of Southeast Asia” mantle. Still, the planned $2.7 billion initial public offering of the retail business of Central Group is a reminder that the $500 billion economy also has its upsides.

    The listing by the Chirathivat family’s Central Retail, which operates almost 2,000 stores across the country selling everything from food to fashion, could be Thailand’s biggest, surpassing sky-train operator’s BTS Rail Mass Transit’s $2.1 billion listing in 2013. The new debut, and others, including a potential one from the retail arm of state oil giant PTT, will put Thailand on course to be the top destination for new offers in the region for a fourth year in a row, based on data from Dealogic.

    Thai companies are also set to grab more attention as they grow anxious about their future prospects and helped by a strong currency, become more active in looking for growth overseas. Bangkok Bank last month agreed to pay $2.7 billion to take control of Indonesia’s Permata, beating rivals from even more mature countries, Japan and Singapore. Meanwhile, Central Retail’s parent is also one of the mooted buyers for British supermarket giant Tesco’s Asian operations, which include some stores in Malaysia. Those assets could fetch $9 billion.

    True, it remains a minnow. The money raised from Thailand’s listings totaled just $3.8 billion in 2019, according to data provider Dealogic. And offerings from Southeast Asia, as a whole, amounted to less than 9 percent of the sum for the wider Asia region including Hong Kong and Japan.

    Still, Thailand’s sustained capital markets success, eclipsing Singapore, is also a stark illustration of how quickly a listings venue that lacks a big domestic market, can lose its appeal as nearby upstarts develop. It’s a fate Hong Kong can now worry about too as Beijing, unnerved by political protests in the former British territory, looks to build up alternatives from Shanghai to Macau.

    Thailand’s success has a strong foundation: a large pool of domestic liquidity has typically translated into higher valuations. The Bangkok SET Index trades at 15 times forward earnings, higher than the FTSE Straits Times Index at around 13 times, according to Refinitiv data. Thailand’s markets are growing up. – Reuters