Invest In Thai Dividend Stocks

[moe666]

When I arrive in Nov. I would like to invest about 50,000 to 60,000baht in 5 or 6 good dividend paying stocks and a bit in one wild card.

Do I have to be on a non-immigrant visa or is tourist visa ok to open a brokage account

name of a good brokage service in Bangkok.

If possible a few names of good dividend paying stocks

I have read many of your post here and there are some well informed traders and investors your help will be very appreciated

[PoeDogg]

Open an Interactive Brokers account online.

No need for a visa, and you can trade stocks, bonds, forex, futures, options, and funds, of worldwide markets (including Thailand) from your computer.

Sorry, but I have no knowledge to offer on what Thai stocks to pick.

[wordchild]

If you want to invest specificaly in Thai stocks i would suggest you open an account with a local broker, (very easy to do) many of which have internet trading facilities. Any international broker trading on the thai set has to use a local entity to trade anyway so may as well go direct and get the benefit of local knowlege. Tisco , bualung ,philips, seamico are brokers i have heard reasonable reports of. you do not need a visa but there are restrictions on foreign ownership of thai stocks. when you buy you will need to buy either on the foreign register or (maybe easier) buy local register and tell your broker to convert to NVDR form . This will ensure that you will receive your dividends. All the brokers i mentioned will be very familiar with this and can advize you.

[consciousrobot]

If you want to invest specificaly in Thai stocks i would suggest you open an account with a local broker, (very easy to do) many of which have internet trading facilities. Any international broker trading on the thai set has to use a local entity to trade anyway so may as well go direct and get the benefit of local knowlege. Tisco , bualung ,philips, seamico are brokers i have heard reasonable reports of. you do not need a visa but there are restrictions on foreign ownership of thai stocks. when you buy you will need to buy either on the foreign register or (maybe easier) buy local register and tell your broker to convert to NVDR form . This will ensure that you will receive your dividends. All the brokers i mentioned will be very familiar with this and can advize you.

Despite Wordchild's suggestion I'd be very interested if anyone knows the specifics of investing through Interactive Brokers. Though going indirectly would normally cost more it may just possibly be that IB have worked out a cheap way of entering the Thai system....and it's sure convenient if you have funds in an IB account.

I would also warn AGAINST taking anything other than advice on technicalities from your broker!

[thaibutty]

It is not possible to invest in the Thai stock market using Interactive Brokers. On recommendations of Thai Visa users, I have opened an account with Pathra Direct and am quite happy with this broker so far.

[moe666]

Thanks for info guys.

[wordchild]

As others have said on the subject of stock investing there is no substitute for doing your own research before investing. There are quite a few Thai stocks that have offered a good historic dividend return, however the past is not always a good guide and the level of dividend payouts can be highly variable year on year for many stocks. It is very important therefore to do some careful research focusing on the fundamentals of the business ie its sustainability, the strength of its balance sheet , its long-term earnings potential and very importantly everywhere in asia the quality of corporate governance and attitude to (non inside ) shareholders. One stock that has been mentioned on here before and may be worth a look at is EGCO , an electricity generating company. This company offers a (pretty) certain dividend yield of 6.6% for 2010 and the management have a pledge to grow dividends at at least 5% per year, it also unusualy for this type of business, has no net debt. There are issues with the stock, particularly regarding its mid-term earnings outlook, but in my opinion,for what that is worth , those concerns are well in the price. There are plenty of other stocks to consider but that might not be a bad place to start and i am sure others will add a few suggestions (or comment on my one) of there own. good luck.

[bjohn34]

I have had a Interactive Brokers account for many years and use to to trade, US, London, Hong Kong and ASX.

However Thailand is NOT available through Interactive Brokers. I just checked again to be sure.. I opened a Thai trading account with Kimeng last year and have been very satisfied.

For dividends I just bought KYE which will pay a dividend of 21.25bht/share for stockeholders of record aug 5. That is 8.2% based on current share price of 259 bht

Edited July 29, 2010 by bjohn34

[bjohn34]

As others have said on the subject of stock investing there is no substitute for doing your own research before investing. There are quite a few Thai stocks that have offered a good historic dividend return, however the past is not always a good guide and the level of dividend payouts can be highly variable year on year for many stocks. It is very important therefore to do some careful research focusing on the fundamentals of the business ie its sustainability, the strength of its balance sheet , its long-term earnings potential and very importantly everywhere in asia the quality of corporate governance and attitude to (non inside ) shareholders. One stock that has been mentioned on here before and may be worth a look at is EGCO , an electricity generating company. This company offers a (pretty) certain dividend yield of 6.6% for 2010 and the management have a pledge to grow dividends at at least 5% per year, it also unusualy for this type of business, has no net debt. There are issues with the stock, particularly regarding its mid-term earnings outlook, but in my opinion,for what that is worth , those concerns are well in the price. There are plenty of other stocks to consider but that might not be a bad place to start and i am sure others will add a few suggestions (or comment on my one) of there own. good luck.

A followup comment n your very insightful post.. I agree that doing one's own DD is a necessity as each person has his own tolerance for risk, etc.

I just looked at your EGCO recommendation and it sure fits my criteria for dividend stocks. Their product is a necessity, dividend history consistent and balance sheet strong with plenty of cash and high current ratio and quick ratio.

[AmericanInExile]

Have you figured in any Thai income taxes in your anticipated returns? Does Thailand have automatic withholding of estimated income taxes?

[wordchild]

Have you figured in any Thai income taxes in your anticipated returns? Does Thailand have automatic withholding of estimated income taxes?

dividends from SET listed companies are subject to 10 % withholding tax and paid to investors (Thai and overseas) net of this. For Thai residents there is no further personal tax to pay and there is no obligation to declare dividends (from SET listed companies) for tax purposes. In certain circumstances, for Thai tax payers , there is a potential tax advantage (ie ability to reclaim tax paid by the company ) in declaring dividends received..

Edited July 29, 2010 by wordchild

[AmericanInExile]

Have you figured in any Thai income taxes in your anticipated returns? Does Thailand have automatic withholding of estimated income taxes?

dividends from SET listed companies are subject to 10 % withholding tax and paid to investors (Thai and overseas) net of this. For Thai residents there is no further personal tax to pay and there is no obligation to declare dividends (from SET listed companies) for tax purposes. Though in certain circumstances, for Thai tax payers , there is a potential tax advantage (ie ability to reclaim tax paid by the company ) in declaring dividends received..

So for Thai "residents" [Thai citizens and expatriates legally retired or working in Thailand?] it's a straight 10% tax on dividends, regardless of total income? Does receipt of these dividends subject one to filing Thai tax returns?

Also, what are commission rates at the local brokerage houses...is it based on number of shares, the total value of the transaction, or flat rate per trade regardless of the aforementioned?

[jfchandler]

I know I'm out on a limb on this subject, but I'm guessing, Americans would have to declare any dividend income from the Thai stock market on their U.S. federal income tax returns.... but then could have their tax obligation offset by the amount of any withholding done at the Thai end...

But I'm not a Thai-US tax guy, so I hope someone who knows better will confirm or refute that.

Have you figured in any Thai income taxes in your anticipated returns? Does Thailand have automatic withholding of estimated income taxes?

dividends from SET listed companies are subject to 10 % withholding tax and paid to investors (Thai and overseas) net of this. For Thai residents there is no further personal tax to pay and there is no obligation to declare dividends (from SET listed companies) for tax purposes. Though in certain circumstances, for Thai tax payers , there is a potential tax advantage (ie ability to reclaim tax paid by the company ) in declaring dividends received..

So for Thai "residents" [Thai citizens and expatriates legally retired or working in Thailand?] it's a straight 10% tax on dividends, regardless of total income? Does receipt of these dividends subject one to filing Thai tax returns?

Also, what are commission rates at the local brokerage houses...is it based on number of shares, the total value of the transaction, or flat rate per trade regardless of the aforementioned?

[wordchild]

Have you figured in any Thai income taxes in your anticipated returns? Does Thailand have automatic withholding of estimated income taxes?

dividends from SET listed companies are subject to 10 % withholding tax and paid to investors (Thai and overseas) net of this. For Thai residents there is no further personal tax to pay and there is no obligation to declare dividends (from SET listed companies) for tax purposes. Though in certain circumstances, for Thai tax payers , there is a potential tax advantage (ie ability to reclaim tax paid by the company ) in declaring dividends received..

So for Thai "residents" [Thai citizens and expatriates legally retired or working in Thailand?] it's a straight 10% tax on dividends, regardless of total income? Does receipt of these dividends subject one to filing Thai tax returns?

Also, what are commission rates at the local brokerage houses...is it based on number of shares, the total value of the transaction, or flat rate per trade regardless of the aforementioned?

there is no obligation (in Thailand ) to report dividends received from SET listed companies whatever ones level of income. In any event i would guess a high proportion of non Thai holders of Thai stocks hold their shares offshore and therefore receive dividends offshore and there can also be some advantages in doing this (capital controls etc).

Edited July 29, 2010 by wordchild

[Time Traveller]

Some of the previous replies need correcting. For Individual taxpayers, you can choose whether to include dividend income in your personal income tax assessment or not. If you choose not to then the 10% witholding tax will be the final amount (except if the dividends are from BOI incentive business in which case there is no withholding tax levied on the dividends).

If you choose to include dividend income in your personal tax assessment then you can claim back any tax credits for a tax refund. For example, most companies have already paid 20% to 30% corporate tax on their profits before paying the dividend to shareholders so you will be able to get a tax refund at tax time from such tax credits (provided your personal income is not already in the top tax bracket of course) including the withholding tax also. The catch is if you choose to include them with your tax return you must include all dividends in the tax assessment not selective with just some company's dividends.

Personally I can never understand the logic why anyone who is a Thai tax resident who owns Thai stocks would want to do so through some "offshore" company to avoid tax. Since you basically guarantee that you end up paying the most tax. i.e. corporate tax at 20% or 25% or 30% plus another 10% withholding. (Did you really think the government weren't going to get their cut first??) If you are living in Thailand it makes financial sense to hold them in your own name and claim the tax credits. If on the other hand your income is high in the 37% tax bracket or the Dividends don't come with tax credits (most do), then you have no benefit to include them in your Tax return so you just exclude them from Personal income assessment which is fine. Very simple.

BTW, to claim tax credits you need to be holding the actual shares and not NVDRs. So non-Thais need to hold Foreign shares to get the tax credits. And one more thing that some new investors might like to know is that individuals do not need to pay capital gains tax on Thai shares traded on the SET.

Edited July 29, 2010 by Time Traveller

[wordchild]

The main reason for many people, who may also be Thai resident, choosing to hold their stock offshore, is to avoid (or at least mitigate) govt imposed capital controls, particularly with the concern that these may become more draconian in the future (they have been in the past). There are other potential benefits as well , but they do depend on the indeviduals circumstances.

Edited July 30, 2010 by wordchild

[Taggart]

I'm in Canada, but it's too bad at least a few Thai companies didn't register as an ADR on one of the major exchanges in the U.S. If any of them either actually grew their dividends or were a deep value investment, I might of got interested. But sigh, after all these years of investing, when it comes to individual equities, for the small investor, the world is still not a very big place, with very limited choice.

[carib102]

Updated information on investing in Thai dividend stocks and some recommendations to be found here:

Dividend Stocks from Thailand: Higher Yield in the Emerging Market

[fletchsmile]

Some of the previous replies need correcting. For Individual taxpayers, you can choose whether to include dividend income in your personal income tax assessment or not. If you choose not to then the 10% witholding tax will be the final amount (except if the dividends are from BOI incentive business in which case there is no withholding tax levied on the dividends).

If you choose to include dividend income in your personal tax assessment then you can claim back any tax credits for a tax refund. For example, most companies have already paid 20% to 30% corporate tax on their profits before paying the dividend to shareholders so you will be able to get a tax refund at tax time from such tax credits (provided your personal income is not already in the top tax bracket of course) including the withholding tax also. The catch is if you choose to include them with your tax return you must include all dividends in the tax assessment not selective with just some company's dividends.

...

Glad you corrected that.

Personally for the amounts involved, and in his situation, I would pick a unit trust. No offence to OP, but he has little understanding of the Thai stock market, with a very good chance that his picks would yield him a total return lower than what experts get. The unit trust would invest in a spread of Thai companies giving him diversification and more than he could acheive himself. Secondly the Thai fund manager will have a far superior knowledge of the market than OP. That's the fund manager's full time job and not his hobby like OP. The fund manager also has access to far superior research than OP and will generally receive market info much quicker than OP. The fund manager will be better connected both formally and informally to the market.

Secondly I would probably choose a unit trust that does not pay divs. This avoids messing around with tax returns and forms etc. As you say he can elect to have either 10% WHT deducted at source or effectively be taxed at his marginal rate as part of an overall tax comp. Instead a less hassle way is simply sell units. So instead of getting say 5,000 baht of div income on 100,000 investments, and messing around with tax, simply have a mutual fund to the value of 100,000 and sell 5,000 baht of the funds as a take out of capital. There is generally no gains on capital tax, so nothing further to do, and no further paperwork or admin. Paperwork in Thailand is not fun.

Specifically as OP asked. I use KGI as a broker for trading Thai shares. I opened the account with simply bank book and passport. My Visa is non-immigration - originally B but my extension of stay is now renewable on the basis of married to a Thai national, so is extended a year at a time. It was a personal referral tho' to KGI which helps. I was rejected by Bangkok Bank's trading arm with the same docs, even though I bank with them.

That said, when I started, well over a decade back I preferred the mutual fund route to self investing, and didn't have a Thai broker.If working here there are also tax breaks such as LTFS. Even now the money I have invested in mutual funds far exceeds what I use for trading in individual shares in Thailand with KGI. The mutual fund money in my view is safer and I consider it as long term investments to support my life here. The trading account is short term for trading, speculation and opportunities, plus the occasional options trade to hedge my investments in Thai market.

[121Advice]

Im not against the SET and there is certainly some value. However, one basic principle (and prudence) is to stick to your doorstep. The SET was Asia's best performing index in 2010 which is fine. Last year it was Philippines. Asian markets are a tad 'frothy' (IMHO) and you should never back last years' winners etc etc.. If you are US/EU then these markets have lots of shares on low P/E ratios, great mid-term prospects and high divi yields. Why go hunting in the SET when there is great value on home turf? Any income gains in Thailand can easily be wiped-out should there be MORE political uncertainty and/or any issues over the delicate subject of the monarchy... (say no more on the latter for obvious reasons)....

The SET has evolved into a popular medium to legally gamble in the LOS but prices are at the high end. With many US/EU stocks at bargain basement valuations do what Warren Buffet does.. "When the greedy get fearful the fearful get greedy...." A simple stock like Apple would have tripled your money in 2 years & with sooooo much cash on the balance sheet (with more amassing now iPad3 is launching) they'll pay a hefty divi soon for sure.. Facebook will be an interesting one to watch. So many 'experts' slagging it off but the advertising revenue potential is astonishing..

If you like a product or a service and are impressed by the firm - BUY IT! Don't follow the crowd and you will do well. Technical analysis is good homework but all the data is openly available to everyone, so even the professionals get tied up in knots. Fundamentally economic crisis is a buying opportunity. Remember the 1970's UK depression, the tech bubble late 90's/00's? Followed by a good few years of PROFITS! The eurozone may be on its knees but it 'aint dead. Likewise the US (love it or loathe it) has turned the corner.. If you drink Coke buy the stock, if you shop in Asda or Tesco - buy the stock. That is of absolutely no use to a day trader or anyone looking for short term gains. For every individual making a quick profit there are a 100 who loose. As you are seeking good divis it looks like you are in it for the long term - much easier that way and a good philosophy to adopt. There's a SALE ON in europe and the US. Fill your boots and grab a bargain!