Investing In Individual Set Stocks As A Foreigner

[iminthailand]

Sorry if this has been answered before. I did a quick search already.

Does anyone know how to invest in Thai public companies as a foreigner? I don't have a Thai bank but could open one if necessary. I'm only looking to go long.

[jbaldwin]

Open an account with a stockbroker.

Seamico Securities (www.seamico.co.th) seems to be well set up for dealing with foreign clients

[chiangmaibruce]

Hi. Yes the first step is to choose a broker and there are a few things to look out for. You will find some great advice and recommendation in this forum.

I like to spend time in the office of the broker I use, talk to the staff and ask lots of questions, etc although I do my own trades via their web site - so for me the staff are important. Be aware here that there may be variations from one office to the next (for the same brokerage company). In other words someone dealing with a Bangkok office of Broker XYZ may have a great experience and recommend them highly, they can speak English well, were extremely helpful, etc. You sign up with the Khon Kaen office and get a very different experience.

Most people however probably don't want to go to their brokers office or speak with anyone. OK then the more important variable here will be their internet site. Some are more technically reliable, some have a greater percentage of information in English, some have better quality and/or more extensive analysis, some are easier to use, and so on. Again I guess check out what other TV users say and then be ready to jump ship if the service you get isn't up to scratch.

As to whether you need to establish a Thai bank account, probably yes but it will probably depend on the company and the nature of the account you set up with them. They will need to assess you and your assets (especially Thai assets) in some way and typically they will photocopy your passport and the passbook of your Thai bank account, and get you to complete an application form. Without a Thai bank account I would think that they would be more inclined (for example) to want you to lodge a deposit with them before you commence trading.

Hope this helps.

- CB

[Lorin]

Cb, I wanted to ask similar question as iminthailand, however after your detailed answer, maybe you can help me to understand something else? What are the benefits to invest in Thai stock market instead let say US? I'm pretty green to all this so detailed answer will be appreciated,. Thanks.

[chiangmaibruce]

Lorin,

Yes, there are certainly fundamental differences between investment in Thailand and investment in a much larger and more mature market like the USA or even Australia. These differences however don't necessarily translate into "benefits", and to the extent that they might, they would vary over time and from one investor to the next. Are there certain benefits from investing in Thai equities (versus US equities) that accrue to everyone, all of the time? No, I don't think so.

An example: Me. I have a Thai spouse and am living in Thailand. I would like to invest something of myself here to foster some stronger connection to this place. For me, this is a "benefit" of investing in Thai companies (versus, for example, companies in Brazil). This is obviously personal and subjective.

Other benefits I see in investing in Thai shares are that:

* It is rarely boring

* Being a smaller market, things are on a scale you can 'get your head around'

* I believe - based on tangible and intangible factors - like the fundamentals of the companies I follow, the fleeting periods when the share market really fires, and the Thai people I see, meet and read about – that the share market here offers a potential for very impressive returns. Sadly this potential seems more akin to a mirage in the desert at the moment.

Thus one part of the answer to your question is definitely "the choice of whether it is better to invest in one market or another depends on your specific individual circumstances".

Taking one step back now. You mentioned that you were a bit "green" about investment, but have gone through the process of setting out a financial plan for your own circumstances to determine whether investment in shares (in any country) is a good step to take?

This process typically addresses the issues of risk tolerance and 'diversification' of investments (or spreading of risk). Your planner would no doubt tell you that it can be better to invest in more than one market, ie. rather than choosing one over another. Note however that this objective can be achieved without taking your money offshore, e.g. invest in a local (USA?) managed fund that in turn invests in the shares of another country (Thailand?).

If you are fairly committed to actually investing here in Thailand then I would recommend extensive research before jumping in. I could waffle on for ages about what that might entail. As you have found Thaivisa however you are probably already on the right track. I assume you have already read other threads here including "Watch your steps at the Thai SET" and "global correction" amongst many other gems.

On a final note. It is not enough to just select good stocks - timing is critically important here. I know it's very easy to get impatient and just start buying shares, but you are bound to regret it later. This is doubly true given the perilous state of the market at the present time. If you do have an uncontrollable urge to stick your toe in the water sooner rather than later, then I would strongly recommend you go the way of a modest investment in a good managed fund (see the "managed fund" thread).

chock dee

- CB

Edited December 17, 2007 by chiangmaibruce

[Lorin]

Lorin,

Yes, there are certainly fundamental differences between investment in Thailand and investment in a much larger and more mature market like the USA or even Australia. These differences however don't necessarily translate into "benefits", and to the extent that they might, they would vary over time and from one investor to the next. Are there certain benefits from investing in Thai equities (versus US equities) that accrue to everyone, all of the time? No, I don't think so.

An example: Me. I have a Thai spouse and am living in Thailand. I would like to invest something of myself here to foster some stronger connection to this place. For me, this is a "benefit" of investing in Thai companies (versus, for example, companies in Brazil). This is obviously personal and subjective.

Other benefits I see in investing in Thai shares are that:

* It is rarely boring

* Being a smaller market, things are on a scale you can 'get your head around'

* I believe - based on tangible and intangible factors - like the fundamentals of the companies I follow, the fleeting periods when the share market really fires, and the Thai people I see, meet and read about – that the share market here offers a potential for very impressive returns. Sadly this potential seems more akin to a mirage in the desert at the moment.

Thus one part of the answer to your question is definitely "the choice of whether it is better to invest in one market or another depends on your specific individual circumstances".

Taking one step back now. You mentioned that you were a bit "green" about investment, but have gone through the process of setting out a financial plan for your own circumstances to determine whether investment in shares (in any country) is a good step to take?

This process typically addresses the issues of risk tolerance and 'diversification' of investments (or spreading of risk). Your planner would no doubt tell you that it can be better to invest in more than one market, ie. rather than choosing one over another. Note however that this objective can be achieved without taking your money offshore, e.g. invest in a local (USA?) managed fund that in turn invests in the shares of another country (Thailand?).

If you are fairly committed to actually investing here in Thailand then I would recommend extensive research before jumping in. I could waffle on for ages about what that might entail. As you have found Thaivisa however you are probably already on the right track. I assume you have already read other threads here including "Watch your steps at the Thai SET" and "global correction" amongst many other gems.

On a final note. It is not enough to just select good stocks - timing is critically important here. I know it's very easy to get impatient and just start buying shares, but you are bound to regret it later. This is doubly true given the perilous state of the market at the present time. If you do have an uncontrollable urge to stick your toe in the water sooner rather than later, then I would strongly recommend you go the way of a modest investment in a good managed fund (see the "managed fund" thread).

chock dee

- CB

CB, thank again for your answer, right now my situation is like most of my money I plan to invest in a biz that will give me 30% guaranteed annual return. On the small part of my money I wanna go and risk it as much as possible if the return is right. Banks can give maximum 4-5% and its not enough, I believe I should find a good broker that can help me out with my first steps into stock market or funds. I read here in other thread about Equity funds with ING Funds Thailand that can bring up to 30% returns. What do you think on those? Disregard the risk, cause I dont mind to lose some money if the chances are good to win big time. If not them can you recommend a good broker or company?

[chiangmaibruce]

Lorin

When I read "help me out with my first steps into stock market or funds", I am certainly thinking 'financial planner' rather than 'broker'. I am not sure whether you are in Thailand now (?) Financial planning is really in its infancy here but there are expat financial planners who I see promoting themselves from time to time. I am sorry I haven't had any experience with any of these people so can't offer a recommendation. Quite possibly others in this forum can help you there.

Yes both ING Funds and Aberdeen Asset are pretty good. Any fund manager will tell you though that "past returns are not necessarily an indication of future performance". In other words the 30% return for the past year could become a -5% return next year. Most funds are based on a basket of shares and share prices go up and down over time. Good managers just get better returns more of the time (compared to the relevant share index). That is why people often say that when anticipating your returns on share-based investments you should be looking at a five year (or more) time frame.

Very few returns are truly 'guaranteed' so I trust you have also had some good independant advice about the business in which you plan to invest the bulk of your money. If this is a Thailand business then I understand that the firm "Sunbelt Asia" can provide this type of advice and are apparently well-regarded.

- CB

[Lorin]

Lorin

When I read "help me out with my first steps into stock market or funds", I am certainly thinking 'financial planner' rather than 'broker'. I am not sure whether you are in Thailand now (?) Financial planning is really in its infancy here but there are expat financial planners who I see promoting themselves from time to time. I am sorry I haven't had any experience with any of these people so can't offer a recommendation. Quite possibly others in this forum can help you there.

Yes both ING Funds and Aberdeen Asset are pretty good. Any fund manager will tell you though that "past returns are not necessarily an indication of future performance". In other words the 30% return for the past year could become a -5% return next year. Most funds are based on a basket of shares and share prices go up and down over time. Good managers just get better returns more of the time (compared to the relevant share index). That is why people often say that when anticipating your returns on share-based investments you should be looking at a five year (or more) time frame.

Very few returns are truly 'guaranteed' so I trust you have also had some good independant advice about the business in which you plan to invest the bulk of your money. If this is a Thailand business then I understand that the firm "Sunbelt Asia" can provide this type of advice and are apparently well-regarded.

- CB

I do live in Thailand, but do my biz outside of the country(as It should be)..:-) I know that past performance of the fund is not a guarantee for future, but its ok to risk some part of the money. Been talking to Kbank today as well, past performance on the Equity Fund is over 30%. I think I will wait till the election and then invest with ING and Kbank...

[thaistocks]

I am a long seasoned pro. investing in Thai stocks, yes for decades. Previous to this I was a licensed broker for a prestigious firm in the US. (Dallas, New York, Chicago). I have a finance degree with honors from a major US University -and for near 20 years Thai stocks is my life, passion and forte. Its all I do.

I happily share some of my insights here on a occasional basis.

Here are some initial/core viewpoints:

1) Many people in this business claim they know what they are talking about, when they do not.

2) Many have strong opinions or promote a strong viewpoint because they invested in that stock -or are advocating a certain broker; perhaps so because they work for that one.

3) The only thing that makes a stock go up or down, is more buying the selling or more selling then buying.

4) The SET is strong "sentiment animal", certain speculative stocks move up or down without any underlying reason. If you want to invest responsibly you must get beyond the day trading and such speculative endeavor.

5) And day-trading is always a speculative activity, no matter what others say.

6) Brokers want to induce you to day-trading, as this is the only way they make commissions.

7) Broker research reports can and have in the past been biased, as they have serious conflicts of interests. Beware of broker recommendations!

8) Thailand has many interesting smaller cap companies' which are growing faster then the average listed company, pay higher then normal dividends and yet trade at a discount valuation to the market.

Many are very good long term investments, the problem is few if any brokers will tell you about them as they want you to actively trade, not long term invest.

8) Many of these smaller cap value stocks are leaders in what they do and have little exposure to the dropping dollar, the US possible 2008 recession or even high oil prices. They have been overall the performance stars, for years.

9) Financial planners are not stock market experts, around here they like too often to bad-mouth the SET and then recommend their own commission loaded plans.

In developed stock markets like the US, smaller cap faster growing companies trade at a premium price to the average listed stock, in Thailand most often just the opposite is the case. No wonder that in year 2007 the MAI index (a secondary Thai stock exchange were many attractive smaller stocks are listed) performed twice as well as the SET. IN the next seperate post I give you the exact numbers on that, see for yourself.

I have no affiliation with any broker or company, I just at times feel like sharing my long insights with some good people, so to give back...on what has been a long profitable journey, thanks to Thai stocks.