This is a part of desertation of presentation at 2nd Business Management International Conference Burapha Business School, Faculty of Management and Tourism, Burapha University, Thailand

1. Sorasart Sukcharoensin , PhD
Assistant Professor ,School of Development Economics
National Institute of Development Administration (NIDA)
Email: sorasart@nida.ac.th
Wanida Jarungkitkul
Graduate Student in Financial Economics,
School of Development Economics,
National Institute of Development Administration (NIDA)
he Assessment of the Stock Exchange of Thailan
(SET)
mpetitiveness in ASEAN : An Application of Port
Diamond Model
2nd
Business Management Internati
Burapha Business School, Faculty of Management and Tourism, Burapha Uni
07/15/14 1
August 22-23, 2013

2.  Introduction
 Objective
 Literature review
 Data and methodology
 Results
 Conclusions
The Assessment of the Stock Exchange of Thailand (SET)
Competitiveness in ASEAN : An Application of Porter’s Diamond
Model
07/15/14 2
Areas of
Discussion

3. 
ASEAN Exchanges linkage between seven stock markets
from six countries
Thailand: The Stock Exchange of Thailand (SET)
Malaysia: Bursa Malaysia (BM)
Indonesia: The Indonesia Stock Exchange (IDX)
Philippine: The Philippine Stock Exchange (PSE).
Singapore: The Singapore Exchange (SGX)
Vietnam: Ho Chi Min Stock Exchange (HOSE) and
Hanoi Stock Exchange (HNX)

ASEAN Exchange make the expediency for funding
and investment in the region. There are 3,613
companies listed in seven stock markets. Total stock
market value is 1,980.37 billion USD or fifth ranked in
the world (World Federation of Exchanges, 2012)
Therefore, AEC and the integration of stock markets
become more interesting in global investor’s
perspective.

In 2009, ASEAN step forward to ASEAN Economic
Community (AEC) for establishing market base and
working together to strengthen in the region.
07/15/14 3
Introduction
The Assessment of the Stock Exchange of Thailand (SET)
Competitiveness in ASEAN : An Application of Porter’s Diamond
Model
Introduction

4. 07/15/14 4
Introduction
The Assessment of the Stock Exchange of Thailand (SET)
Competitiveness in ASEAN : An Application of Porter’s Diamond
Model
Introduction

5. 07/15/14 5
Objectives
The Assessment of the Stock Exchange of Thailand (SET)
Competitiveness in ASEAN : An Application of Porter’s Diamond
Model
In this study, we explore the
competitiveness of Thai Stock Market among 5
nations. That is one of Thailand's capital
market reforms in the capital market
development plan 2012 to dismiss the
monopolies and raise the competitiveness of
the Thai Stock Market.
The result of this investigation will mark
(rank) a competitive position of Thailand stock
exchange among ASEAN 5 and identify the way
to improve its competitive position.

6. 07/15/14 6
Literature re
The Assessment of the Stock Exchange of Thailand (SET)
Competitiveness in ASEAN : An Application of Porter’s Diamond
Model

Diamond Model is the competitive advantage framework
for countries, sectors, and firm levels. The model is created
from the theoretical underpinnings of this interplay of
country competitiveness topics such as “productivity”
(Porter, 1990) The Firm’s
strategy
structure and
rivalry
The Firm’s
strategy
structure and
rivalry
The Related-
supplier
Industries
The Related-
supplier
Industries
Factor
Conditions
Factor
Conditions
Demand
Conditions
Demand
Conditions
Chance
Role of
Govern
ment
Diamond Model (1990)

7. The Competitiveness of Thai Stock Market among ASEAN 5 Nations
The Competitiveness of Thai Stock Market among ASEAN 5 Nations
The Competitiveness of Thai Stock Market among ASEAN 5 Nations
Data

The macroeconomics factors are synthesized from the
Global Competitiveness Report in the year 2012
presented by World Economic Forum (WEF) and
International Institute for Management Development
(IMD)

Stock market information, we collect from the stock
market database of each country, the World Federation
of Exchanges database, and DataStream database
between 2007-2012.
07/15/14 7
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond ModelData and meth
The Assessment of the Stock Exchange of Thailand (SET)
Competitiveness in ASEAN : An Application of Porter’s Diamond
Model
thodology
nking the competitiveness :CA,I = (ValueA,i – MinA)
(MaxA –
MinA)/10
CA, i
= Relative value of factor A for Stock Market i
ValueA, i
= Numeric value of factor A for Stock Market i.
MinA
(Minimum) = minimum value of factor A in all Stock
Market.
MaxA
(Maximum) = minimum value of factor A in all Stock
Market.
10 = Graph Scale full points to compare among Stock Market.
i = SGX, SET, BM, PSE, IDX
Cmkt cap,SET
(549.25 –
132.16)/10
Max = SGX = 10
Min = PSE = 0
SET = 3.10
3.1 = (262.5 – 132.16

8. The Competitiveness of Thai Stock Market among ASEAN 5 Nations
Description
Score (1-10)
SGX SET BM PSE IDX
1 Factor Conditions
1.1 Basic Factor
Infrastructure
- Quality of overall infrastructure 10.0 4.5 6.2 0.0 0.3
-Investment in telecommunications
(% of GDP)
3.9 4.7 10.0 0.0 5.2
- Connectivity of people and firms 10.0 1.0 6.6 4.5 0.0
- Technological cooperation 10.0 1.3 8.9 0.9 0.0
1.2 Advanced factors
Deepening Financial Systems
-Financial Depth
(Market Size as a % of GDP)
10.0 8.3 8.9 0.0 3.4
- Availability of financial services 10.0 2.3 6.2 1.5 0.0
- Affordability of financial services 10.0 2.9 7.1 2.9 0.0
- Ease of access to loans 10.0 3.1 8.1 0.0 5.0
- Soundness of banks 10.0 5.3 5.8 5.8 0.0
- Euro money country risk 10.0 2.1 3.7 0.0 1.2
- Financial risk factor 8.9 7.4 10.0 7.8 0.0
Quality of labor
- Finance skills 10.0 3.2 8.9 7.9 0.0
- Information technology skills 10.0 1.3 8.9 0.9 0.0
- Language skills 10.0 0.0 8.8 8.5 2.6
- Quality of management schools 10.0 0.7 5.3 3.3 0.0
- Remuneration in services professions ($) 10.0 5.6 3.1 0.0 0.9
- Brain drain 10.0 3.0 5.7 0.0 2.6
- Capacity for innovation 8.8 0.6 10.0 0.0 5.9
- Company spending on R&D 10.0 0.0 8.0 0.5 4.0
Mean Score (4.7) 9.16 2.96 7.57 1.98 1.54
Rank 1 3 2 4 5
I. Factor Conditions

SET had many strengths
such as financial depth
(market size as a % of GDP),
financial risk factor, and
remuneration in services
professions ($).

On the other hand, SET
had many weaknesses such
as quality of overall
infrastructure, language
skills, company spending
on R&D, capacity for
innovation, and quality of
management schools.
8
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond ModelResult
The Assessment of the Stock Exchange of Thailand (SET)
Competitiveness in ASEAN : An Application of Porter’s Diamond
Model

9. Deepening Financial Systems,
GCR 2012 (Ranking)
Source: World Bank, AsianBondsonline and World Econ
07/15/14 9
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond ModelResult
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model

10. The Competitiveness of Thai Stock Market among ASEAN 5 Nations
Descriptions
Score (1-10)
SGX SET BM PSE IDX
2. Demand conditions
2.1 Size and growth of demand
- GDP growth (%) 0.0 3.1 4.8 4.8 10.0
- Market capitalization (billion USD) 10.0 3.1 5.1 0.0 3.6
- Market capitalization growth (%) 2.3 4.0 0.0 9.1 10.0
- Value of share trading (billion USD) 10.0 4.6 2.9 0.0 2.6
- Volume of share trading (‘000 shares) 2.4 5.7 0.0 0.5 10.0
- Value traded on stock markets (USD per capita) 10.0 0.5 0.5 0.0 0.0
- Turnover velocity (%) 5.6 10.0 2.0 0.0 3.3
2.2 Sophisticated demand
- Number of listed companies 7.5 4.1 10.0 0.0 2.4
- Product in market (stock, derivative and bond) 10.0 7.0 6.0 0.0 4.0
- Market concentrate (CR10) 10.0 0.0 7.1 0.7 0.7
- Herfindahl Index (HI) 1.1 6.7 10.0 7.8 0.0
Mean Score (4.4) 6.9 4.1 5.1 1.7 4.2
Rank 1 4 2 5 3
II. Demand
Conditions
SET had strength in turnover velocity and average daily turnover
which was highest in 5 nations. In addition, SET had products
variable nearby the SGX and the BM. However, SET had many threats
such as low stock traded per capita (SET had 3,233 US dollar per
capita, but the SGX had 55,576 US dollar per capita), and lacked of
newly listed companies
07/15/14 10
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond ModelResult
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model

11. t capitalization 2007-2012 (Billion
alue of share trading 2007-2012 (Million
Turnover of Velocity 201
07/15/14 11
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond Model
SET
SGX
BM IDX PSE
Result
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model

12. The Competitiveness of Thai Stock Market among ASEAN 5 Nations
Descriptions
Score (1-10)
SGX SET BM PSE IDX
- Ethical practices 10.0 1.8 6.4 2.4 0.0
- Credibility of managers 10.0 4.9 7.0 4.6 0.0
- Corporate boards 9.1 4.3 10.0 4.4 0.0
- Auditing and accounting practices 10.0 3.0 7.1 3.1 0.0
- Venture capital availability 10.0 1.2 7.6 0.0 5.3
- Image abroad 10.0 5.6 6.9 0.0 3.2
Mean Score (4.9) 9.8 3.5 7.5 2.4 1.4
Rank 1 3 2 4 5
III. Related and Supporting Industries
 SET was third ranked (CR, SET = 3.50). There has many strengths
such as image abroad, credibility of managers, and corporate
boards. However, the SET has many weakness such as venture
capital availability, ethical practices, and auditing and
accounting practices. Therefore, it will be affected to develop
firm for listing in stock market
07/15/14 12
Result
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model

13. Source: International Institute for
Management Development
07/15/14 13

14. Descriptions
Score (1-10)
SGX SET BM PSE IDX
4. Firm Strategy, Structure and Rivalry
4.1Structure
- Market Capitalization to GDP (%) 10.0 1.5 5.0 1.4 0.0
- Financial sector liberalization 10.0 3.1 8.2 0.0 2.8
- Trading participants 10.0 0.0 0.4 0.3 0.2
- Corporate Governance (CG Watch Report) 10.0 6.6 5.6 1.3 0.0
4.2Rivalry
- Market share in WFE 10.0 2.4 5.1 0.0 4.1
Stability of Stock market
- Stock Volatility 10.00 4.03 9.14 5.66 0.00
- Stock Return 0.00 5.45 2.86 2.55 10.00
- Skewness of market return index 10.00 7.99 0.00 5.21 7.20
- Exchange rate Volatility 3.54 8.45 0.00 6.71 10.00
Fundamental Finance
- Price - Earnings ratio (P/E ratio) 9.6 10.0 3.5 0.0 1.4
- Price to book ratio (P/B ratio) 10.0 7.9 7.3 7.0 0.0
- Dividend Yield 3.7 10.0 5.9 0.0 0.5
Mean Score (4.7) 8.1 5.6 4.4 2.5 3.0
Rank 1 2 3 5 4
IV. Firm Strategy, Structure and Rivalry

The firm's strategy which was found that every country has a
standpoint in developing and making a strategy of different stock
markets. Structure of Stock Market SET was smaller than SGX and BM

Thailand was become liberal market like Singapore (Transition).
Because of efficiency in banking system, equity market development
and strong M&A activity (The Financial Development Report, 2012).
07/15/14 14
Result
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model

15. 
Thailand raise up scores in corporate Governance (ASIA CG
Report 2012)
Country
Tota
l
CG Rules&
Practices
Enfo
rce
men
t
Political
&
Regulato
ry
IGAAP
CG
Culture
1.Sinapore 69 68 64 73 87 54
2.Hong
Kong
66 62 68 71 75 53
3.Thailand 58 62 44 54 80 50
4.Japan 55 45 57 52 70 53
4.Malaysia 55 52 39 63 80 38
6.Taiwan 53 50 35 56 77 46
7.India 51 49 42 56 63 43
8.Korea 49 43 39 56 75 34
9.China 45 43 33 46 70 30
10.Philippi
nes
41 35 25 44 73 29
11.Indone 37 35 22 33 62 33
Source: Asian Corporate Governance Association (2012)
07/15/14 15
The SET was second ranked in ASEAN5 next to the SGX. The SET
had strength in rules relating to the timeliness and frequency of
financial reporting, disclosure of director share transactions,
disclosure of substantial ownership stakes (5% and above). Audit
committees were mandatory. However, the SET should be improving
corruption a major issue.
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond Model
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond ModelResult
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model

16. Descriptions
Score (1-10)
SGX SET BM PSE IDX
5. Role of Government
5.1 Efficiency of Public Finance:
-Public Finance 10.0 1.7 5.0 1.5 0.0
-Fiscal Policy 10.0 0.3 0.8 0.6 0.0
5.2 Institution Framework 10.0 4.3 7.4 1.3 0.0
5.3 Government Regulation of
Business:
- Burden of government regulation 10.0 1.5 6.2 0.0 2.7
- No. procedures to start a business 10.0 8.3 9.2 0.0 5.8
- No. days to start a business 10.0 3.8 9.3 2.4 0.0
- Efficiency of legal framework. 10.0 1.7 8.3 0.0 2.6
- Shareholders' rights 10.0 0.0 7.3 1.8 0.9
- Public trust in politicians 10.0 0.0 5.4 0.5 2.0
Taxation
- Corporation Income Tax 10.0 5.4 3.8 0.0 3.8
- Dividend tax. 10.0 3.3 10.0 0.0 0.0
- Value-added tax (VAT) 8.3 8.3 10.0 0.0 3.3
Mean Score (4.4) 9.8 3.5 6.6 0.6 1.6
Rank 1 3 2 5 4
07/15/14 16
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond ModelResult
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model
V. Role of Government
The SET was third ranked (CG, SET = 3.50) ,There is many threats
such as shareholders' rights, public trust in politicians, and fiscal
policy.

17. Total Scores SGX 8.76, BM 6.25 SET 3.92, IDX 2.36, PSE 1.8607/15/14 17
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond ModelResult
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model

18. 
The SGX was the highest stock
market competitiveness among
ASEAN5 whereas the PSE was the
lowest ranked and the SET was
third ranked in terms of
competitiveness.

The SET can outperform two
ASEAN (IDX and PSE), but is
defeated by the SGX and the BM.

The SET had relatively
performing lower than average
ASEAN5 in four factors: factor
conditions, demand conditions,
related and supporting industries
and role of government.

In order to raise competitive
advantage of the SET, it is
necessary to improve weakness
and promote strengths for
Strategic Position among ASEAN5
Stock Market
High
High
07/15/14 18
The Assessment of the SET Competitiveness
in ASEAN:
An Application of Porter’s Diamond ModelConclusi
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application of
Porter’s Diamond Model

19. Question & Answer
Thank youThank you
he authors are thankful to the Thailand Research Fund (TRF
for research grant.
07/15/14 19

20.  References

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
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
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
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
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
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
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07/15/14 20
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application
of Porter’s Diamond Model

21.  References (C

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
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07/15/14 21
The Assessment of the Stock Exchange of
Thailand (SET)
Competitiveness in ASEAN : An Application
of Porter’s Diamond Model