SGX announced that it will launch Singapore Depository Receipts under the DR linkage with the Stock Exchange of Thailand. — Bloomberg
SINGAPORE: From May 30, retail investors in Singapore can buy and sell shares of Thai blue-chip companies listed on the Stock Exchange of Thailand.
They can do so easily, in the same way that they buy and sell Singapore shares on the Singapore Exchange (SGX).
This is made possible after SGX announced yesterday that it will launch Singapore Depository Receipts (SDRs) under the DR linkage with the Stock Exchange of Thailand.
This is the first exchange-level cooperation in Asean on depository receipts and demonstrates an important step forward in enhancing stock market connectivity.
Much like American Depositary Receipts in the United States, SDRs are instruments representing interest in an underlying security listed on an overseas exchange, in this case, the Thai stock exchange.
Serene Cai, head of securities trading at SGX Group, said each SDR is issued on a one-to-one basis. This means one SDR represents one share of the Thai company, she said.
She added that just like SGX-traded stocks, the SDRs are traded on the standard board lot size of 100, where an investor who buys one lot is actually buying 100 SDRs.
The SDRs will trade on SGX during local trading hours; all trades and cash distributions will be denominated in the Singapore dollar; and the SDRs will be held in custody in the investor’s Central Depository account.
Michael Syn, senior managing director and head of equities at SGX Group, said the first batch of SDRs will be linked to three Thai companies, which ride on the reopening and energy themes.
They include Airports of Thailand, Thailand’s largest airport operator; CP All, which operates Thailand’s largest convenience store chain under the 7-Eleven brand; and PTT Exploration and Production, the only listed exploration and production company in Thailand.
Together, these three companies make up 18% weightage of the benchmark SET50 Index, a large-cap stock market index which tracks the price movements of the top 50 stocks on the Thai stock exchange.
Syn said Thai investors will subsequently have access to Singapore companies in the form of depository receipts listed in Thailand.
“We will bring some Singapore companies to Thailand. We are validating with our Thai friends, what shares would you like to buy? Would you like our banks? Would you like real estate investment trusts?”
SGX said there are mutual benefits to linking up with Thailand.
Taking a closer look at the composition of the SET50 Index, Cai said the index is dominated by the manufacturing, energy and consumer sectors.
This is unlike in Singapore, where financials and real estate are more prominent.
“It is a different profile of sectors. We have much less manufacturing, but we have more finance. The growth story on each side is different. Our economies are quite complementary,” said Syn. — The Straits Times/ANN
