Dividend season in Thailand

[ExpatJ]

I just got this seasons dividend list from my broker- slim picking this time round. Only one 'blue chip' stock on the list PTTGC 2.1% dividend XD date August 26. Fortunately i noted it dropped in price more than 1% yesterday so today i asked my broker to buy at the opening. My plan is - hopefully other investors buy the stock in lead up to Aug 26 for the dividend and then I sell the day before XD date for a tidy profit. Plan B will be to hang on for the the dividend if price doesnt increase and then hold on to stock until it increases over time (hence i only do this dividend play with 'blue chip' stocks that realistically and odds on will increase back up in price in a few days/weeks).

This div play has worked 90% of time for me in the past- lets see this time round:)

[David48]

Interesting ... do any others here use this strategy successfully?

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[SantiSuk]

Interesting. I guess what you are saying is that there is a tendency in the Thai market for institutions to buy income (swapping income for a capital loss) because they need to meet the income objectives stated in their promises to their investors? If it is a standard feature in the market perfect market theory would suggest that prices will adjust over time to compensate, destroying the edge in the trades.

Not knocking it if it works for you. If the stock you mention is the gas stations I'm sure they are a good long term buy anyway. PTT seems to be a very slick operation from a customer angle. A classic core income stock if it is milking its assets rather than aggressively expanding at home or abroad and returning spare cash to shareholders.

[AyG]

Interesting. I guess what you are saying is that there is a tendency in the Thai market for institutions to buy income (swapping income for a capital loss) because they need to meet the income objectives stated in their promises to their investors? If it is a standard feature in the market perfect market theory would suggest that prices will adjust over time to compensate, destroying the edge in the trades.

This isn't only a feature of the Thai market. Asian income funds have been rather popular over the last 2-3 years (at least in the UK). This pushes up the price prior to the dividend. Income is generated at the expense of capital gain. Naive income-hungry investors look at the yield rather than looking at total return.

[Time Traveller]

Interesting. I guess what you are saying is that there is a tendency in the Thai market for institutions to buy income (swapping income for a capital loss) because they need to meet the income objectives stated in their promises to their investors? If it is a standard feature in the market perfect market theory would suggest that prices will adjust over time to compensate, destroying the edge in the trades.

Most thai dividends come with a tax credit, so buying before XD then selling after with price lower by the dividend amount would still work out favourable for them. The problem is that there is no gurantee that will work, price swings could be much more than the dividend and so risk losing money by doing this.

[Time Traveller]

Interesting. I guess what you are saying is that there is a tendency in the Thai market for institutions to buy income (swapping income for a capital loss) because they need to meet the income objectives stated in their promises to their investors? If it is a standard feature in the market perfect market theory would suggest that prices will adjust over time to compensate, destroying the edge in the trades.

Most thai dividends come with a tax credit, so buying before XD then selling after with price lower by the dividend amount would still work out favourable for them. The problem is that there is no gurantee that will work, price swings could be much more than the dividend and so risk losing money by doing this.

[fletchsmile]

The other newspaper not allowed to provide links to on here had a small section on this approach on Monday on the back page of their business section.

Cheers

Fletch