Broker Review Tips
Thai Broker Review Tips. Febuary 8, '2023.
"There are two times in a man's life when he should not speculate; when he can't afford it , and when he can". Mark Twain, Following the Equator.
Here at Thaistocks.com I view investing the old fashion way by trying to understand what the company does and then by paying close attention to valuation, anticipated future growth rates in earnings, dividend yields -and not least the company reputation. Unlike many brokers here I do not view speculating as a worthwhile activity in new wealth creation over time.
Some Thai brokers are better then others and over 30 years I have gotten to know many. Here I just share my own viewpoints.
Many brokers offer both on-line trading accounts and/or services’ clients through good English speaking marketing officers (MO). The advantage in having a marketing officer is that you can call and place orders away from your computer, ask short questions - and get -for better or worse-feedback- if you want this. Also get their research which often is rather limited to larger capitalized stocks -and at times biased. The drawback is that dealing through a marketing officer you pay a 0.25% commission per trade, vs. about 0.2 %, if you trade on-line.
Another advantage of a non internet trading account is that you can ask the marketing officer to call you directly if any shares you own or want to own, make a move -or have news. So saving you time and energy watching the market yourself. But there are no guarantees the MO will watch this as carefully as you expect. This advantage alone can save you the slightly higher commissions charged on these regular accounts. It can also mean the MO gets you out of good stocks too early while letting you keep the laggards.
Beware though, that if the marketing officer calls you too often you may be induced churning your account into a trading account which may not be your initial investor objective. Too many MO are day trading vs. investor returns geared. Rarely do Thai broker marketing officers see themselves as new wealth creators.
Of course and understandably most of broker research is on larger cap stocks, some of the research is dominated by so called “retail analyst” which can be more momentum driven, rather then a value investing style. Most brokers offer a daily market comment but its mostly centered on short term day trading. Broker research here can be biased -and of course sometimes outright wrong. Investors should understand that the stock brokerage business has been very competitive for many years along with long declining brokerage trading commissions rates -and this is so worldwide. So often by the time you see a new broker stock recommendation the price has already moved up.
Just like long distance telephone charges, stock transaction buy/sell commissions have decreased some 90% over the past say 20 years. Hence it is not fair to expect the same service & research as in years past when stock research budgets were understandably much higher. This is one key reason why you must not just rely on broker research..and another reason seeking a membership here!
Post such reduced brokerage commissions worldwide investors all over have to learn to seek objective & unbiased information/ideas/research from other sources as well. And this well beyond just a listed company's annual report. Here I deliver this regularly and is why Thaistocks.com can be of high value to our contributing members and as such should be viewed as likely a wise investment, not a cost.What should be your expectations of a good broker, as is seen from the investors' standpoint: Besides clear statements and transaction e-reporting in my view the broker should be a leading one, say in the top 10 or so. The MO should answer their phones fast with not too many busy signals nor absinthism -and in good English. The marketing officer (MO) should be discreet, meaning never discussing or copying other accounts. The MO should never front-run the client and follow all the SET/SEC rules -and point out to the investor any perceived nonsensical investor/trader behavior. Last and not least, any complaints raised by the investor must be answered at once by the MO, and/or preferably its manager. Sadly this may often be lacking here. The MO should also determine with the investor what the client's stated investment objective is, and then follow this. If the client is a long/medium term value investor and then starts to frantically day-trading this will likely be detrimental to his/her long term investor success. Mixing long term investing with short term trades is a tricky affair at best and this is not recommended. If the MO makes a clear mistake on entering a buy/sell order wrong any monetary damage resulting should be paid by the broker, not the investor.
Trading can be profitable around solid core good fundamental chosen stocks, but this must never regress into speculating on volatile counters with little information -or on just graphs. Day trading is a form speculating, not investing. Again, often MO's influences clients/investor into speculation with likely poor results, over time. An investor trap to be on guard about. Another big danger is in taking profits too soon, resulting in selling out your chosen winners, while holding on to laggards. In little time you have a portfolio of laggards and so again poor results. Because Thailand has sort of entered the middle income trap now, I view high dividend stocks more favorable & prudent, vs. high growth choices which can be risky and elusive.
The MO is principally here to execute your buy/sell orders and extend excellence in dealings. Not to give financial advice or to offer much feedback on the investor merits of this or that stock. As frankly speaking, most are just not qualified on that. MO's spend their time watching the market and entering orders, not analyzing/researching stocks. In recent years I advocate your buy/sell transactions to be done on line, not least due to lower broker commissions.
Most of all, MO's must not spread rumors or misinformation, advocating trading on inside information or promoting client speculating when these want to invest for the longer term. All as is prescribed by the Thai SEC/SET besides the brokerage firms own house rules. MO's may claim this or that "is against SEC/SET rules" when its actually against their own broker rules.
Rule violating as well as telling lies/exaggerations are a big no-no at the core of our profession. The MO should also point out and assist you when a stock you own has new rights offering, free warrants, stock or cash dividends or any other such shareholder rights, sometimes called "sweeteners"....i.e. MO should look out for the investor as a client which is performance return driven! Or in offerer you new shares in an IPO's. (new companies being listed on the Stock Exchange), where I frown upon the current practice on offering these without an English language prospectus. Thai IPO's which have an international underwriting and so an English language prospectus is available to institutions, must give this as well to individual foreign investors here, or if not its a form of IPO information discrimination.
If you are ready to invest here in a responsible way for the medium term, members can drop me an e-mail and I can recommend a list of a few good brokers. If you are a day trader and want to speculate please look elsewhere, as this is not the service here for you.
"The clairvoyant society of London will not meet Tuesday because of unforeseen circumstances". An advertisement in the London Financial Times.
"The greatest of all gifts is the power to estimate things at their true worth." La Rochefoucauld
"The gambling known as business looks with austere disfavor upon the business known as gambling" Ambrose Bierce, The Devils Dictionary
"Theories that are right only 50% of the time are less economical than coin flipping". George J. Stigler.
Just like on a plane trip, the pilot is responsible to get you there…not for what you do once you get to your destination. The MO is responsible in executing your buy/sell orders, provide you with the companies’ research and answer short questions while being careful on opinions. Which so includes not steering you into a decision which may be biased, trading geared or otherwise deviating from your stated investor objective. Remember, in the end its always up to you to pull the buy/sell trigger.
An MO must never take discretion in your account, meaning entering buy/sell orders without your specific authorization. So do not give your MO orders which are not clear on price or volume, or leave room for discretion.
Of course Thaistocks.com never participates in any way, form or shape in any broker commission revenues generated by members or thaistocks.com followers! Giving objective viewpoints and then sharing in trading commissions is a flagrant violation in ethics. ***
I invite all contributing members to share their broker experiences in an open way, confidentiality is guaranteed. Drop me an email with your experience, good or bad. My direct e-mail is: email@example.com
Last but not least, be careful dealing with any brokers located outside of Thailand when investing in Thai shares. Commissions are always higher there, the executions may not be as good and some feedback in the past show that shareholder sweeteners, like free warrants or dividends may at times not be credited? Also, many outside Thailand brokers don't want to trade in Thai stocks and then just say its "not allowed", nor recommended. Leaving some non-Thai investors wrongly so to believe one can't invest in individual Thai stocks. Non-Thai's can own in their own individual names as NVDR's, Thai shares and upon selling can repatriate their funds abroad anytime as long as its in their own name! Correction/update: As of mid February 2023, there are 612 SET listed Companies and 201 MAI listed Companies.
Best Regards,Paul A. Renaud. www.thaistocks.com
Below are various additional important tips, with compliments from thaistocks.com as reported over the past 5 years here.
E-mails, on line, phone calls and even faxes are the usual way you enter orders to buy/sell stocks in Thailand, like most elsewhere. Realize that e-mails can be unreliable as if the broker does not check constantly his/her mail box or is delayed, an e-mail may remain unread for a time or even be lost? At times e-mails can take longer in reaching their destinations and so the timing of these are imperfect.
And if your e-mail order does not get entered you cannot really complain as nobody knows when it exactly arrived at the brokers desk. One way to prevent this is to ask the broker to immediately send back confirming your order has been received. This even before the execution confirmation. (This way you will know if the e-mail is not received right away.)
Phone orders are probably the fastest -besides they are recorded. If you want to sell a stock at a certain limit, enter your order early during the day, before 10 AM that way you get a good line-up, called the queue. All buy/sell orders here are day orders only -unless your broker manually re-enters them each day again. But there is no guarantee this will done -or not forgotten.*There are no automatic stop-loss or stop-limit orders available on the SET. But recently the SET has announced they will offer GTC, good til cancled orders. Its about time! *You can only open one account in your own name, per broker. *No joint named accounts are allowed in Thailand. Never have in near 35 years here. Don't ask me why.
Thai Banks do not offer any stock broking services, nor do they know much about it. So don’t ask Thai Banks about this. There are some 35 registered brokers here and you can view the list of licensed brokers at the official SET web page. As of January 2023 there are some 650 companies listed on the Thai Stock Exchange.
Contributing Member feedback to us on dealings & experiences with Thai or foreign brokers trading in Thailand is most welcome and taken seriously.
When opening a Thai brokerage account you may want to establish what is called an ATS account (Automatic Transfer System) that way all your buy/sell trades settle directly through your own Thai Bank savings account, which you must have in place to receive your dividends. In this case the broker will ask for a copy of your Thai bank passbook.
Some brokers may allow foreign residents to automatically deposit their dividends into their broker accounts? Or, to mail the checks in select foreign currencies, to the clients foreign address. You must ask the brokers directly about this, as I am not sure. Usually a Thai bank account is required to receive your Thai tax favored dividends.
ATS is preferable, as then the bank holds your idle funds, not the broker. You so earn some small interest on your bank savings account and have full access to your funds through the ATM cash machines, worldwide. Some brokers pay higher interest amounts on cash balances then the banks, so ask about his.
I would advise not to mix your designated Thai stock bank account (called ATS) with your normal Thai bank savings accounts, this so not to get confused. If you wire funds from overseas, wire these to your broker directly. Not first to your Thai bank -and then to your broker. The reason is that when you want to repatriate these funds & profits, the Thai broker should have the proper import of capital documentation.
IF so done correctly from the start with a Thai broker sending funds back to your own named overseas bank account, anywhere, should never be an issue. Wiring back the funds overseas, using your Thai bank will have limits, can create delays and perhaps unnecessary headaches. You can repatriate funds and capital gains back anytime without any Thai tax consequences on capital gains on stocks, as long as you are an individual and its sent/wired back to your/same name.
I do not focus on Thai derivatives nor currency trading, nor do I want to nor will I.
At Thaistocks.com we make regular updates and it's up to the members to decide what he/she chooses to invest if any and to keep up! Use our search engine, if you want to read on a stock or topic or see articles by topic. Periodically I make a table on what I like or what seems fully valued, in my view. A 12 month model portfolio is regularly followed where I have beaten the SET index on a regular basis. Except for years 2017 to 2019. Our member-forum is an active smart place to exchange viewpoints, clear up any confusion, questions, or comments. This is reserved for contributing members only.
Thaistocks.com has no relationship or business sharing of any kind with any Thai broker or listed company. Never did, never will.
We here first and foremost always and objectively represented the interests of you, mostly the individual investors. The above as all on this site are just my own views. If you have good or bad experiences with any broker or otherwise you are most welcome to write us or if you are a contributing member post a comment at our forum-lounge to share with all and get my response.