The Stock Exchange of Thailand (SET) recently signed a renewal of memorandum of understanding (MoU) with the Korea Exchange (KRX) that will be in effect until 2023. The recent MoU between Thailand and Korea, which is an expansion of a 2006 agreement aims to continue the synergised efforts on capital market development and business opportunities between the two exchanges.
"The MoU between SET and KRX, spanning another five years from today to 4 February, 2023, underscores SET's strategic plan to enhance fundraising and investment in order to create business opportunities for long-term growth in the region. The extension of the MoU period would foster our long-term relationship and synergize concerted efforts on new products and services development,” said SET President Kesara Manchusree.
These exchanges include products and services development, IT infrastructure cooperation and information trade.
KRX Chairman and CEO Jiwon Jung said that the “…MoU renewal is believed to be the very outcome of the exceptional achievements of the SET-KRX collaboration during the last five years in various areas including, but not limited to IT business and knowledge sharing. Today, the MoU has opened a new chapter of cooperation for both exchanges, even widening the possibility of mutual growth and prosperity.”
How will this new agreement help Thailand?
Through this agreement, both countries will be able to better complement each other. KRX is famous for being Asia’s leader in innovation and trading technology while the SET can benefit from their know-how by applying certain trading and technological platforms to its operations.
“KRX has ceaselessly explored innovation in the regional exchange industry, best exemplified with information business and a new ecosystem for startup companies, while SET has shown its unprecedented growth in terms of market quality and quantity, positioning itself as a regional pioneer. Building upon previous success and accomplishments, KRX aims to unleash the new growth potential of the Asia Pacific exchange industry with SET," Jung added.
According to KRX, they had a total market capitalisation of US$7 trillion with an average trade of US$8.04 billion per day in 2017, comprising of 2,134 listed companies. By the end of 2017, they also had 75 startups trading on their Startup Market which assists startups development by means of crowdfunding.
It is a global trend where we are seeing more and more startups in the region. Thailand is one of the bigger players, currently leading the way for Southeast Asia. Thailand’s market has seen a notable growth from 2012 to 2016 where Thailand has gone from having less than 3 funded startups to over 75. In 2016 alone, Thai startups raised funds of at least US$86.02 million, according to Techsauce – Thailand’s leading startup media.
With Korea’s expertise and innovation in the startup sphere, Thailand can learn a thing or two from them.
“The agreement also embraces cooperation for improving IT infrastructure, investment activities to expand investors' opportunities, seeking the possibility of collaborative investment as well as information sharing to further strengthen the development of the two capital markets," Manchusree added.
Through Thailand’s Eastern Economic Corridor (EEC) plan, which is part of a two-decade national strategy being crafted by Prime Minister Prayuth Chan-Ocha to boost Southeast Asia’s second-largest economy, Korea’s partnership will definitely come in handy to Thailand.
According to Bloomberg, Thailand plans to develop sophisticated industries such as robotics, aviation maintenance and digital technologies through the corridor’s three eastern provinces – Chachoengsao, Chonburi and Rayong.
In addition to the MoU, cooperation between the two markets also include implementing new technology for the clearing and settlement system of equity and derivatives products, among others.
ASEAN and Korea
From ASEAN’s point of view, it will be beneficial for the bloc to further strengthen its relations with South Korea since ASEAN needs to diversify its economic interdependence. However, prior to that, a number of ASEAN countries need to improve their economic climate by developing their respective infrastructure, just as how Thailand is doing.
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