Before Sept 11, the Stock Exchange of Thailand index had gained 27% and was one of the best performing markets in the world. But after the attacks, the SET plunged sharply as investors dumped their holdings amid fears of a global war.

A 10% rebound in early December was still below the levels set earlier in the year, but it signalled that the SET had a good opportunity to pick up further gains next year.

Companies in several sectors, notably energy, telecommunications and commerce, recorded gains in their share prices and improvements in corporate performance after successfully restructuring debt.

But the slow pace of local economic recovery, which was influenced by a slump in export revenues and a global downturn, dragged on investment sentiment.

Economic growth this year is forecast at only 1.3-1.8% by the Bank of Thailand, down from earlier forecasts of 2-3%.

In late November, PTT made headlines after selling 220 million shares to local retail investors in only 85 seconds on the first day of subscription through 2,600 branches of five banks. But a lot of complaints were lodged by disappointed investors, who queued in vain outside banks in the hope of obtaining shares, about the alleged unfair placement. The share issue was the country's biggest public share offering.

Overall, falling interest rates did not cause a big shift in money from depositors to investment in securities, while domestic consumption remained relatively low.

Still, concerns linger about non-performing loans in the banking sector, still waiting to be cleaned-up after the implementation of the Thai Asset Management Corp.

Average trading volume on the stock exchange from January to early December 2001 stood at 6.16 billion baht per day, a 62% jump from 2000. Market capitalisation in early December was 1.49 trillion baht, up from 1.27 trillion baht in 2000.

The SET index closed at 304.05 points as of Dec 7, up 12.95% from 269.19 at the end of 2000. The composite index before Sept 11 was at 342.56.

Foreign investors were said to be staying away from the Thai bourse and the Morgan Stanley Capital International (MSCI) index cut its benchmark weightings on investment in Thailand.

PRIVATISATION DRIVE

Analysts agree that market fundamentals have improved considerably this year with efforts by the Thaksin Shinawatra government to revive the bourse. Several measures were implemented to encourage new listings _ including a speedy privatisation programme, tax incentives and legal amendments.

Under the privatisation plan, 16 state enterprises planned to list on the bourse to raise an additional 800 billion baht in market capital by 2003.

Internet Thailand's employees prepare for the company's online IPO.

The main objective was to bring in new quality products to the stock exchange, allow the public to share the wealth of performing enterprises and maximise state asset values.

After brilliant marketing campaigns to drum up investor interest, Internet Thailand and PTT Plc, previously known as the Petroleum

Authority of Thailand, were the first two in the new wave of state enterprises to list on the SET.

In early November, the Inet privatisation and market listing was launched using an on-line initial public offering through the platform of Settrade.com. The system was successful with shares oversubscribed 33.3 times against the total 110 million shares available.

The IPO price of Inet shares was 3.50 baht with a par value of one baht per share. Inet shares began trading with a 21% jump in share price on its first day of trading.

Late November, PTT made headlines after selling 220 million shares to local retail investors in only 85 seconds on the first day of subscription through 2,600 branches of five banks.

But a lot of complaints were lodged by disappointed investors about the unfair placement of PTT shares, even if it was the fastest share allotment on record.

The Securities and Exchange Commission stepped in to investigate the case immediately, but the investigation is still pending.

The state oil firm floated a total of 920 million shares to mobilise 32 billion baht from the public, the largest IPO in the country's history. About 35% of IPO shares were sold to foreign investors.

On Dec 6, PTT made its listing debut, winning accolades as the stock that had the largest trading turnover in a single day. The market capitalisation of PTT is 97.9 billion baht, ranked third after Advance Info Service and Krung Thai Bank.

However, PTT shares gave many investors a rude shock when the price fell below the IPO level of 35 baht on the third day of trading.

Lead underwriters for PTT have been assigned to stabilise the share price using the four-billion-baht fund set up under a "greenshoe" option that runs until Jan 4.

The next state enterprises to list on the SET in 2002 are the Telephone Organisation of Thailand and the Communications Authority of Thailand.

Analysts believe TOT and CAT will try to follow the success story of PTT and float shares to the public in less than 90 seconds, but a conversion of concessions at both agencies are still being formulated.

Market regulators announced a cut in corporate tax, from 30% to 25%, for new listings on the main board and a 20% corporate tax rate for those that list on the Market for Alternative Investment.

The tax incentives will be given for five years to companies listed on the two bourses up until Sept 4, 2004.

Additionally, a series of rules and requirements were amended to provide flexibility to listed companies.

In December, the listing criteria for the SET and the MAI were separated by the size of paid-up capital. Companies wishing to list on the main board must have a minimum paid-up capital of 200 million baht and those below 200 million baht will go to the MAI.

A revision of the Public Companies Act was also passed, allowing listed companies to spilt share par values and buy back securities from the bourse as treasury stocks.

This year nine new listed companies carried out their IPOs compared to only one, from Ratchaburi Holding Plc, 2000.

The nine IPOs were United Securities, Brooker Group, Roynet, Home Products Centre, Team Precision, Internet Thailand, PTT, Aeon Thana Sinsap (Thailand) and Nava Leasing.

Among those companies, only Brooker Group, Roynet and Team Precision were also listed on the MAI.

IPO fever is again emerging in the market as investors seek to make gains from IPO shares. All nine new listings, except Brooker which began its share trading two days after the Sept 11 attacks, saw their stock prices stay above IPO levels on the first day of trading.

REGULATORY CHALLENGE

During the first half of this year, the SET's top management was led by chairman Amaret Sila-on and president Vicharat Vichit-vadakan. Both of them were not as aggressive as many people expected, in terms of delivering measures to boost the bear market.

The Investor Fair in June, which the SET claimed was a great success, attracted a lot of potential investors but did not immediately bring in any new investors to the market.

Day traders and speculators continued to dominate share trading activities and some irregular trading patterns were found involving Metco, BankThai and United Securities.

But the closest the SET came to tackling this problem was to issue an order to indefinitely suspend trading activities of Yuanta Securities which was accused of involvement in unusual trading of BankThai shares in May 2001.

Yuanta Securities resumed its operations a few days later after improving its internal control system to comply with the SET's requirements.

Mr Amaret ended his second two-year term as the SET chairman at the end of July and Mr Vicharat resigned from the SET presidency on Sept 1.

High hopes have been pinned on Chavalit Thanachanan, who was appointed to replace Mr Amaret, and Kittiratt Na Ranong, who succeeded Mr Vicharat.

With a more active management approach, Mr Chavalit and Mr Kittiratt have escalated the SET's role as a place where both existing and newly listed firms can mobilise funds to expand their business at a reasonable cost.

But unfortunately, both of them had to deal with a sharp decline in the SET index after the Sept 11 attacks.

However, Mr Kittiratt has continued his public relation activities, putting the development of the SET master plan back on the agenda, and revising many regulations to provide flexibility to listed companies.

In November, the SET also finalised a new bid-offer spread for share trading aimed at boosting liquidity and helping investors trade stocks at lower costs.

In December, the SET stepped up to solve the brokerage commission problem, setting the floor rate at 0.25% for all kinds of investors.

This was a setback for the securities industry which had liberalised the fees in October 2000.

At the SEC, many new and amended regulations were also passed such as trustee and securitisation laws.

In July, boiler room operations of the Brinton Group and Benson Dupont Capital Management were raided by the SEC and police, with more than 100 people arrested.

The case challenged the power of the SEC in investigating and monitoring illegal securities firms.

After the crackdown, many boiler rooms closed but some continue to make cold calls to attract overseas investors.

In October, the SEC was widely criticised for helping to clear Prime Minister Thaksin of any wrongdoing from his share transfer to nominees between 1995 and 1999, but Mr Thaksin's wife, Khunying Pojamarn was fined 6.3 million baht over the share transfer.