ASEAN: Dividend & Corporate Governance is the “Silver Bullet” to ASEAN investment

let Bualuang do the worrying about ASEAN & AEC for you?

  • By Pooky, Thai Intel’s economics journalist

On True Cable TV, a fund manager from Bualuang, said the firm plans to issue a mutual fund that targets the fund investment on high dividend paying firms, that also has strong corporate governance.

Mondo News Reports:

Three hundred-eleven firms listing on The Stock Exchange of Thailand (SET) and the Market Alternative Investment (mai) announced 2011 dividend payment of a combined THB 326.11 billion (approx. USD 10.62 billion) — up 7 percent from a year earlier, making the third straight year of record high dividend payments.

“The impressive amounts reflected their continuously growing performances, although businesses faced rising costs and were severely affected from the floods last year. This also indicated the strength of the companies’ cash flows. The sectors generating rising dividends in 2011 are Information & Communication Technology, Energy & Utilities, Petrochemicals and Chemicals, Banking, Construction Materials, Food and Beverage, and Professional Services,” said SET’s Executive Vice President Chanitr Charnchainarong.

As of March 8, 2012, the 311 companies paying dividends included 270 SET-listed firms with dividend payment worth THB 324.31 billion and 41 mai-listed firms with dividends worth THB 1.80 billion. These payouts generated a 2011 dividend yield of 3.87 percent and payout ratio of 53.42 percent. In addition, 24 firms gave stock dividends worth a total THB 35.74 billion.

Constituents in the SET High Dividend 30 Index (SETHD) paid 2011 dividends worth THB 137.35 billion, giving a 5.02 percent dividend yield and 58.28 percent payout ratio. The SET-listed firms which paid the highest dividends, in descending order, are Total Acces Communication pcl (DTAC), PTT pcl (PTT), Advanced Info Service pcl (ADVANC), PTT Exploration and Production pcl (PTTEP), and Shin Corporation pcl (INTUCH), representing 43.16 percent of SET’s total dividends, by value.

The mai-listed firms which paid the highest dividends, in descending order, are: Goldfine Manufacturers pcl (GFM), Unimit Engineering pcl (UEC), Tirathai pcl (TRT), Kiattana Transport pcl (KIAT), Jubilee Enterprise pcl (JUBILE). Their total dividends accounted for 31.46 percent of mai’s total dividends.

By sector, the top five dividend payments were to be found, in descending order by valuation, in the Information & Communication Technology, Energy & Utilities, Banking, Construction Materials, and Petrochemicals and Chemicals sectors.

However, Bualuang is also focusing on firms with strong corporate governance. This move could in theory, reflect how many Thai stock market listed “Blue Chip” firms, that have traditionally, payout strong dividends, are fast expanding into the ASEAN region, where an ASEAN Economic Community (AEC) will be put in place in about 3 years.

That rapid expansion into new geographic area, coupled by a call by many governments in ASEAN, including the ASEAN head, for ASEAN to stream-line regulations, could point to some increased uncertainty with a future dividend flow.

That expected increased in uncertainty in future dividend flow, could be counter-balance, by Bualuang, stressing to invest in firms with strong corporate governance. Firms with strong corporate governance, typically, is more sensitive to all class of stake holders of a firm.

Bualuang is part of the Bangkok Bank financial conglomerate, that is known in Thailand, to be close to the Thai opposition party, Democrat Party.

  • The following is from the Wikipedia:

Corporate governance is “the system by which companies are directed and controlled” (Cadbury Committee, 1992).[1] It involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders; it deals with prevention or mitigation of the conflict of interests of stakeholders.[2] Ways of mitigating or preventing these conflicts of interests include the processes, customs, policies, laws, and institutions which have impact on the way a company is controlled.[3][4] An important theme of corporate governance is the nature and extent of accountability of people in the business, and mechanisms that try to decrease the principal–agent problem.[5]

Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.[6][7] In contemporary business corporations, the main external stakeholder groups are shareholders, debtholders, trade creditors, suppliers, customers and communities affected by the corporation’s activities. Internal stakeholders are the board of directors, executives, and other employees. It guarantees that an enterprise is directed and controlled in a responsible, professional, and transparent manner with the purpose of safeguarding its long-term success. It is intended to increase the confidence of shareholders and capital-market investors. [8]

A related but separate thread of discussions focuses on the impact of a corporate governance system on economic efficiency, with a strong emphasis on shareholders’ welfare; this aspect is particularly present in contemporary public debates and developments in regulatory policy (see regulation and policy regulation).[9]

There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large corporations, most of which involved accounting fraud. Corporate scandals of various forms have maintained public and political interest in the regulation of corporate governance. In the U.S., these include Enron Corporation and MCI Inc. (formerly WorldCom). Their demise is associated with the U.S. federal government passing the Sarbanes-Oxley Act in 2002, intending to restore public confidence in corporate governance. Comparable failures in Australia (HIH, One.Tel) are associated with the eventual passage of the CLERP 9 reforms. Similar corporate failures in other countries stimulated increased regulatory interest (e.g., Parmalat in Italy).

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