SINGAPORE: Five Singapore depository receipts (SDRs) linked to Thailand’s blue chip companies will be listed on the Singapore Exchange (SGX) on April 1, expanding the Thailand-Singapore Depository Receipts (DR) Linkage to eight SDRs.
These will allow retail investors here to buy and sell shares of these companies listed on the Stock Exchange of Thailand (SET) in the same way they would with Singapore shares on the SGX.
The five SDRs are Advanced Info Service (AIS), Thailand’s largest telco conglomerate, in which Singtel has a 23% stake; Delta Electronics, a beneficiary of the trend towards electric vehicles and data centres and Gulf Energy, one of the largest energy producers in Thailand with both conventional and renewable energy businesses.
Also included are Kasikorn Bank, a leader in loans to small and medium enterprises and a leading player in the high net worth space and Siam Cement, the largest conglomerate in South-East Asia with businesses in industrial materials such as cement, building materials, chemicals and packaging.
Serene Cai, head of securities trading at SGX Group, said the Thai companies were chosen because they are the market leaders in their industries.
They are also in a good position to capitalise on the digitalisation trend, she added.
The three current SDRs were listed on the SGX in May 2023.
They are 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 largest listed petroleum exploration and production company in South-East Asia.
Together, the eight SDRs make up more than 40% of the benchmark SET50 Index, which tracks the price movements of the top 50 stocks in the Thai markets.
Phillip Securities, the issuer of both batches of the SDRs, said Singapore investors now have the opportunity to invest in Thailand’s growth story directly.
The World Bank expects the Thai economy to grow by 3.2% in 2024, as tourism and private consumption pick up, rebounding from 1.9% growth in 2023.
Gerald Wong, chief executive of investment advisory platform Beansprout, said the Thai SDRs widen his investment options into companies that are not well represented or found in the Singapore market.
For instance, investors who look only at the Singapore market may not be able to find a large-cap oil exploration and production company such as PTT Exploration and Production to invest in, he added.
There may be different major oil services companies that are exposed to the oil and gas industry, such as Kim Heng Offshore and Marine or Rex International, but no large exploration and production firms are currently listed in Singapore.
“That is where some of these SDRs might present options for investors,” Wong said.
AIS chief executive Somchai Lertsutiwong said the upcoming listing of his company’s SDRs on the SGX offers new opportunities for investors in Singapore and gives them “convenient access to AIS’ growth journey”.
He said the telco is transforming from a traditional communications services provider into a cognitive technology company.
The linkage between Singapore and Thailand is the first exchange-level collaboration on DRs in South-East Asia.
Turnover, or trading activity, of SDRs has doubled from their initial launch in 2023 to more than US$300,000, SGX said. A higher turnover means it is easier for investors to buy or sell shares in the open market.
By the end of February 2024, assets under management tripled to US$2mil and Cai said about US$1mil is held by retail investors.
Phillip Securities managing director Luke Lim said something Singapore-based Thai SDR investors should note is that they do not have voting rights, as they are not direct shareholders of the underlying Thai stocks. However, they will still be entitled to dividends that the Thai company pays out, and to any corporate action like a rights issue or bonus share issue, Beansprout’s Wong added.
Over in Thailand, the Singtel DR will also list on the SET today under the reciprocal leg of the Thailand-Singapore DR Linkage, bringing the total number of DRs with underlying Singapore stocks on the Thai exchange to four.
The DR on Singapore Airlines was listed in September 2023, while the DRs on defence company ST Engineering and tech firm Venture Corp were both listed in February 2024.
Cai said SGX will explore future listings of more Thai companies from within the eight sectors that it will have an SDR from today: consumer, industrials, energy, financials, communication services, technology, utilities and materials.
Where we will focus is to “deepen the shelf of names within each sector”, she said. Cai added that Thailand’s healthcare sector could “potentially be interesting”.
Asked which exchange will be the next for an exchange-level DR link-up, Cai said: “A lot of conversations are going on with different neighbours. Indonesia is also exploratory, for sure.”
In January, the SGX signed a memorandum of understanding with the Indonesian stock exchange that covers various areas of collaboration, including on DRs, she added. — The Straits Times/ANN
