The retail investor portion of the Stock Exchange of Thailand (SET) was reduced to around 37.2% at year-end 2018 as investors switched from stock trades to investment in single stock futures and other derivatives on the Thailand Futures Exchange (TFEX).
This is the first time the portion of retail investors on the SET registered below 40%. Retail investors made up 45-46% in 2017.
Trading on the TFEX rose by 31.5% year-on-year, with daily trading increasing from 324,217 contracts in 2017 to 426,213 contracts in 2018.
The most active trading products were the SET 50 index futures, which saw a 61% year-on-year rise, and single stock futures, which registered a 16.1% increase.
"The notional value of single stock futures accounts for around 80% of the underlying common stocks on the SET, so we expect the value of single stock futures trading on the TFEX to be equal to that of underlying assets on the SET by the end of this year," said SET president Pakorn Peetathawatchai.
In the past, the retail investor segment on the SET made up around 50-60%. That ratio has gradually declined after the bourse launched derivative products on the TFEX, where investors can invest a small amount of money through futures contracts based on the trend of underlying stocks.
Investors can, however, experience high leverage on profits and losses in futures.
Derivative investment products have seen a surge in popularity among retail investors over the past few years, said Mr Pakorn.
"A change in investor behaviour means the bourse has broadened the range of products where investors can continue investing in accordance with market conditions," he said.
"Retail investors have not disappeared, but adjusted their short-term portfolios to futures products instead, while some have invested in equity funds."
In a related development, capital outflows from the SET were registered at 287 billion baht last year, while funds moving to long-term debt securities tallied 190 billion, said Mr Pakorn.
Foreign investors continue to invest in Thai bonds, with an expected return of 2.7-2.8%, which is higher than the yield from the US Treasury notes, he said.
Foreign investors still have confidence in Thailand's economic fundamentals, with the baht's value remaining stable, said Mr Pakorn.
"The stock market remains volatile this year because of the uncertainty of external factors such as the Sino-US trade negotiations and interest rate normalisation [by the US Federal Reserve]," he said.
Soraphol Tulayasathien, senior executive vice-president and head of corporate strategy at the SET, said the bourse's daily turnover averaged 57.7 billion baht last year, with November identified as the lowest trading month of 2018 at 41.6 billion a day.
Daily turnover rose to 42.1 billion baht in December, considered a good sign for investment sentiment, said Mr Soraphol.
The SET's market capitalisation stood at 16.2 trillion baht in 2018, down 9.5% year-on-year.
