Thai launch marks Liquidnet’s tenth market in Asia

Liquidnet has launched Thai stocks on its platform, following hot on the heels of the buy-side block crossing provider's recent expansion into Indonesia, Malaysia and the Philippines.

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Liquidnet has launched Thai stocks on its platform, following hot on the heels of the buy-side block crossing provider’s recent expansion into Indonesia, Malaysia and the Philippines. Thailand-listed stocks represent the 42nd market the firm has launched for globally and its tenth in Asia Pacific. Liquidnet now boasts 70% of the world’s stocks listed on its platform, with about 80% of its trades taking place at the mid-point, meaning price improvement for both sides of the trade.

Liquidnet said demand for investment opportunities in emerging markets in Southeast Asia – currently considered highly dynamic – was driving institutional investors’ appetite for large block liquidity. Thailand’s equity market rose to new highs in March 2013 and ranked as Asia’s best performing market in 2012, followed by the Philippines. In 2012, Thailand’s GDP grew 6.4% on government infrastructure spending raises, increasing domestic consumption and higher private sector investment.

Equity markets generally have been rallying recently, leading some observers to predict the beginning of the ‘Great Rotation’, a cyclical trend whereby institutional investors switch from bonds to equity, in response to ultra-low yields and a 20-year rally that some see as ripe for rebalancing. Lee Porter, head of Asia Pacific at Liquidnet, said signs of a shift into equity have been seen recently in the US market, often regarded as a bellwether for other equity markets.

Richard Coulstock, head of dealing at Eastspring Investments in Singapore, a Liquidnet member, described the launch for Thailand as “welcome” saying, “Thailand is, in my personal view, a market where spread and liquidity issues can lead to high market impact costs… The ability to cross blocks at mid- market levels with no market impact could benefit our underlying clients and I have clearly seen the benefits of this in other markets.” 

Although Liquidnet’s Asian clients in markets like Thailand are typically offshore, Porter noted that a mix of onshore and offshore participants is preferable and left open the possibility of onshore membership expansions in future. 

Liquidnet also continues to explore the possibility of expanding in other Asian markets, with Porter highlighting India and Taiwan in particular, while mainland China remained a more distant possibility.

Liquidnet achieved record volumes in Asia Pacific for Q1 2013, hitting US$5 billion of principle traded for the first time. Daily liquidity also rose from an average US$8.4 billion to US$10.4 billion a day during Q1 2013, while average execution size in Q1 2013 across Asia Pacific hit US$1.26 million. In comparison, the average trade size on the Stock Exchange of Thailand in Q1 2013 was around US$5000. 

By: Harry Thompson