Singtel is next to be traded on Thailand bourse under depository receipt linkage scheme

[BANGKOK] Singtel will be the next Singapore stock to be traded on the Stock Exchange of Thailand (SET) under the expanding Thailand-Singapore Depository Receipt (DR) linkage scheme, said Singapore Exchange (SGX) group chief executive Loh Boon Chye.

Speaking at an event in Bangkok on Monday (Nov 27), he said this will likely take place some time in 2024. It will be an important step towards the enhanced integration of South-east Asia’s stock markets.

DRs are financial tools that allow investors to trade in a foreign stock on their own stock exchange.

SGX and SET began their exchange-level DR cooperation – the first of its kind in South-east Asia – in 2021. On May 30 this year, three major Thai stocks – Airports of Thailand, 7-11 operator CP All, and oil and gas giant PTT Exploration and Production – began trading on the SGX via the DR linkage.

The DR on Singapore Airlines made its debut on the Thai stock market in September this year.

SET president Prakorn Peetathawatchai said the partnership with SGX marks the first milestone of the journey towards a more integrated and accessible Asean exchange market. This, he added, will enable investors to trade Asean stocks via DR seamlessly across the entire region.

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Loh said the three Thai DRs have been well received by retail investors in Singapore, whose numbers have doubled over the six-month period since the launch in May. The spreads and prices of the three DRs were similar to those seen on SET, he noted.

“Our investors are able to access Thai stocks on a platform they are familiar with through their security brokers, dealing with local trading hours and the local currency under domestic rules that they are familiar with,” said Loh of the DR stocks.

While more Singapore stocks are expected to be traded on the SET in future, Loh said these will remain under the SGX’s supervision.

“Even though it is a DR, the underlying stock is still traded on the SGX platform, which means it is under our surveillance,” Loh told The Business Times.

SET has recently faced some accusations of overlooking “naked short selling” – the short selling of a stock without first borrowing it from someone else – to ramp up certain share prices.

Prakorn said that the exchange had already investigated several alleged cases of naked short selling but had yet to find proof of the practice.

While the Singapore-Thailand DR Linkage is the first such scheme between two Asean bourses, it is not the first for SET.

Currently, SET has 18 DRs with underlying securities listed on SGX, the Hong Kong Exchanges and Clearing Limited, the Ho Chi Minh Stock Exchange in Vietnam, and the Euronext. There are also five fractional depository receipts (DRx).

A news release from SET indicated that the total market capitalisation of the DRs and DRx at the end of the third quarter of 2023 was 17 billion baht (S$647.8 million), a 28 per cent increase from the same period last year.

SGX has likewise been spreading its products to other exchanges outside South-east Asia.

“At SGX, we will shortly be listing ETFs (exchange-traded funds), both ways, on the Singapore and Shanghai stock exchanges,” said Loh. SGX also collaborates with the New Zealand and Shenzhen stock markets.

In a speech at the event, Loh expressed optimism about the prospects of South-east Asian economies and, by extension, their respective stock exchanges.

“Singapore and Thailand have blazed a trail for closer collaboration between exchanges in this region. With exchanges working together, we can draw more investments into Asean, which is set to become the world’s fourth-largest economy in 2030,” he said.

“Investors in Singapore recognise the growth potential of Thailand, with its vast domestic consumer market, supported by industries which are moving up the value chain.”