Thai firms face pressure on free float rules

Thai firms face pressure on free float rules

BANGKOK (Reuters): About a quarter of listed Thai firms are under pressure to offer more shares to the public or face eventual delisting, as the stock exchange strives to boost liquidity and improve overall market attractiveness.

Analysts said some big-cap stocks like Thai Airways International may have to speed their privatization plans to increase free float while state-run banks like Krung Thai Bank and BankThai would have to offer shares to the public.

Surat Palalikit, executive vice president of the Stock Exchange of Thailand (SET), said last week the exchange had given listed firms a June 30 deadline to meet a requirement of having at least 10 percent of their shares in free float.

Under Thai regulations, listed firms are required to have at least 150 retail shareholders, with a combined holding of at least 10 percent of paid-up capital, or annual share trade of least 10 percent of paid-up capital for two consecutive years.

But the rules have not previously been strictly enforced, and currently more than 80 firms fail to comply with the rules.

Surat said the SET will not delist those firms immediately but will give them a grace period from June for adjustment.

"The SET will consider the time available for listed firms to follow through with this regulation. If the company is unable to comply, the SET will proceed accordingly," Surat said.

If no plans are put forward by these firms to increase their free float above 10 percent, then the exchange will suspend the shares from trade and eventually delist them.

Analysts have said the lack of liquidity of many stocks and a 49 percent limit on foreign ownership of Thai companies make Thai stocks less attractive to foreign investors.

The tightening on free float rule came after a stock market investigation into wide price fluctuations recently in BankThai. Less than one percent of BankThai's shares are freely traded, which analysts say leaves its share price open to manipulation.

"The increase in free float will help reflect more a real picture of the market. This should expand investment opportunities for a wider base of investors," said Sukit Udomsirikul at Capital Nomura Securities.

Meanwhile, in a bid to pull itself out of severe doldrums, Thailand's stock exchange will hold its first-ever "Investor Fair" next month to tell grass-roots investors that the stock market is not just for the experts.

Stock Exchange of Thailand President Vicharat Vichit-Vadakan said the exchange is expecting as many as 200,000 people to attend the five-day event starting June 8 at an exhibition center on the outskirts of Bangkok.

"We are trying to present the stock market as something not difficult, something not complicated, something not far away from you, and saying investment in the stock market should be considered when thinking about where to put your money," Kriengchai Boonpoapichart, a vice president of the exchange, said in a recent interview.

He said that less than 5 percent of Thailand's total population hold shares, compared to about 30 percent in the United States and more than 50 percent in some European countries such as Finland.