Retail investors: The rise of new powerhouse investors in the Thai capital market

The Stock Exchange of Thailand (SET) joins major stock markets from New York to Europe to India in welcoming a phenomenal increase in the number of new individual investors.  Driving the trend is likely the COVID-19 pandemic, as millions of individuals either found themselves with more time on their hands or considered investing in stocks as a new or additional way to make money and grow their wealth.

From January through June 2021, 230,445 new individual investors in Thailand dipped their toes into investing for the first time, and this number also reflected continuing momentum from 2020 when the number of individual investors throughout the year was as high as 119,634.

In fact, they boosted the number of retail investors in the Thai market to 1.96 million by the end of June, responsible for a total of 4.67 million trading accounts. The trading volume by some 961,000 retail investors in the first six months averaged USD 1.5 billion (THB 47 billion) or nearly half of daily market turnover.

The data dating back to 2017 revealed that the number of new individual investors in the Thai exchange had never hit the 6-digit level until 2020. Remarkably, only 47,429 individual investors made their first move into the market in 2019. 

The vigorous interest in investing in stock has been contributed to the COVID-19 pandemic. Some individuals are encouraged to build an emergency fund, by exploring an additional source of income.

In Thailand, lockdown measures mean many office workers have to work from home, having ample time to observe market movements and to test the waters. One fifth of the 230,445 new retail investors started off by subscribing to PTT Oil and Retail Business pcl (OR)’s IPO shares early this year. The IPO drew more than 500,000 subscriptions from retail investors, the highest ever booking by a number of investors for an IPO on the SET thanks to the subscription method that emphasized the number of subscribers rather than the number of shares per subscriber.

New individual investors are active traders. They are estimated to account for 24 percent of trading activity by retail investors during the first six months.

A new breed of investors

Throughout the past 5 years, of these new individual investors, about 60 percent represent Gen Y, or those who are aged 25-41 years. While Gen Y and Gen X (aged 42-56) had contributed the most of trading in the past 5 years, 2021 was the first year that Gen Y’s trading exceeded half of trading activity by new individual investors.

It is worth noting that risk appetite and investing behavior vary accordingly to age. Those in the low-age zone tend to show more interest in small-sized stocks.

Because young age determines a lower level of savings, the average transaction of three fourths of the new individual investors is less than 100,000 baht a month. But their investment briefly jumped in 2020 when the SET Index slumped in light of COVID-19.

In the digital age, digital trading platforms have gained more popularity among these new individual investors. In 2020 and the January-to-June period of 2021, 98-99 percent of these investors executed orders only through the Internet. This is also the practice for 86 percent of the Baby Boomer Generation.

Notably, in the past 5 years, about one fifth of the investors either stopped trading in the second year or downsized their investment in subsequent years, but more than half of them have remained in the market. 

This article is based on SET Note Vol. 7/2021: Get to Know New Retail Investors in the Thai Capital Market. 

Link to the report: https://www.set.or.th/dat/vdoArticle/attachFile/AttachFile_20210722.pdf

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