Trading Thai stocks and NVDR

[SymS]

I've been owning some stocks on the SET for few months, and today I got a call from the lady that helped me open my trading open saying I purchased stocks illegally!

 

She apologized for not informing me, and told me I had to sell all my stocks, and that I could purchase the stock again but manually ticking NVDR in the trading platform.

 

That's crazy, Anyway, NVDR stands for Non-Voting Depository Receipt, and that's to avoid foreigner getting control of Thai companies. But considering the small amount I had purchasing, my voting rights would be insignificant. Is it really the law that foreigners can only own NVDR stocks?

Edited November 12, 2021 by SymS

[rimmae2]

Unless it has changed recently it is not mandatory to purchase stocks as NVDR. However, assuming that you hold stocks as F then liquidity may be a problem should you decide to sell and price may be lower than NVDR, partly due to lower demand.

 

I forgot to tick NVDR a couple of times and after realizing sold and bought NVDR.

[wordchild]

That does not sound right, and I would call again to check the information you were given in terms of how to rectify the situation.

From what you say, you bought local registered stock as opposed to either F (foreign) or NVDR stock. I assume that you do not qualify to own L (local) stock, in which case the company is required , under Thai Law, to withhold any stock entitlements from you , eg dividends. It is analogous to buying a condo from the Thai allocation if you are a foreigner.

This should be easy to rectify without the need to sell and repurchase, which would likely cause expense.

The broker should be able to convert your shares into either F (if shares are available) or, maybe easier, convert your shares to NVDR form. In very rare situations the NVDR allocation is also full but I cannot think of any Thai shares for which this is currently the case. Simply instruct your broker to convert (ie rather than sell) your shares to the appropriate class.

 

FWIW my personal preference is to own Thai shares as an F registered owner, you can always sell as Local shares if the liquidity/ price is better. But that is as a long term holder, if a trader simplest is to just buy In NVDR .

 

check again with the broker concerned regarding your options.As what you were told simply does not sound correct.

Ask them if it is possible to convert all your holdings to NVDR form as a first step.

 

 

 

 

Edited November 14, 2021 by wordchild

[Oxx]

On 11/12/2021 at 10:57 AM, SymS said:

I purchased stocks illegally!

You have not purchased stocks illegally.  Foreigners are allowed to purchase Local (L) stocks.  However, if they do so, they are not entitled to dividends or have any voting rights.  It's stated quite clearly on the SET website:

 

https://www.set.or.th/en/news/econ_mkt_dev/files/Foreigners_Participation.pdf

 

In fact, foreign day traders frequently trade L stocks since they're typically not interested in dividends or voting rights.

 

As others have said, best to stick with F stocks and NVDRs.

[SymS]

Thank you very much for the information. I specifically purchased the share for their dividend, so I'll check if I can convert those to NVDR without cost.
My broker is KTZMico (Krung Thai bank). Last Friday, I was told "Actually you have to sign many documents and attach the copied of your passport. It’s very complicated and waste of time."  with regards to converting them to NVDR.

[wordchild]

Hi I just checked this with a Thai broker and maybe what the broker told you originally is correct ie you may need to sell and repurchase rather than convert. It seems there are different rules for converting from NVDR to F (and F to NVDR) as opposed to converting from Local to NVDR. While you can convert NVDR to F at any time after purchase (and I have done this myself a few times) you cannot convert Local shares to Foreign or NVDR after the trade has settled ie you have only 1 day to correct the mistake after your purchase. It looks like you will need to sell and repurchase. The broker should be able to do this for you at minimal cost (as they can match up the trades) but there will be some cost involved. Sorry about the incorrect info I posted above. I would think it is best to discuss this with the broker and get them to execute the trade rather than trying to do yourself online.