Experience of an Investor in Thailand, running Thaistocks.com.
"Know your customer". Professional standard seemingly ignored here and the numbers show it. 
While I know from ancillary reports the number of individual broker accounts in Thailand has barely changed over the past 10 years. I so then wondered if this changed the past 2-3 years? As the market here has been bullish during this period. Increasing from around 700 to well over 1000 points on the SET benchmark index.
Regarding information on KIM ENG growth of new retail accounts data vs. SET, this leading broker wrote me:
"I ask Khun Boonporn to provide me the growth numbers for Kim Eng accounts. That information shows our number of accounts rose by 14% in 2010 and 9% in 2011".
I so then asked my own Kim Eng marketing officer here on this company's SET market share, in the past same 3 years which was emailed to me as follows in late November:
Kim Eng Year mkt share (%)
2011 (Jan-25 Nov) 11.81%
2010 12.76%
2009 10.68%
We see from these two set of numbers that while this leading broker increased number of accounts, it also increased its market share by an average of say at least 11%. Hence one can we conclude that total growth of SET accounts remains just about stagnant in this same period. (As I know is the case long before this.) This is especially significant in this current period as the SET last year and before then was rather bullish. Passing the 1100 line a few times this year, for the first time since the 1997 Asian crisis. Bullish markets in this industry bulge new accounts, but not even that made new participation here meagre at best! Something is clearly missing with the SET -and I think its the entrenched stale practices of most brokers.
Kim Engs' ~ 10-20% increased market share could entirely so be just because of more ad spending -or simply on being compared to just the mediocre others?
I so ask again: How can Thai income per capita have regularly increased in the past 10 years and yet overall new account participation by retail investors remain stale?? This is the industry question to ask!
Professioinal Experience of an Expat in Thailand, running Thaistocks.com.
In the medical profession the first thing they teach is “do no harm”. In this stock investor business its “know your customer”. When I became a broker in the US they engrained in us that again and again. Its makes allot of sense and is obvious the more you think about it. Sense and good judgment for the client, the broker and the proper development of a country’s capital markets, which is so important for savings intermediation! A word most brokers here don’t even understand.
In Thailand the number of retail broker accounts has been stale for many many years; this despite the fact that income per capita here has about doubled just in the past 10.
As a long term professional observer I know why this is so. You can summarize it in one word: “Confidence”. There is no confidence. Too many brokers here could care less about the first rule -and instead directly or indirectly so advocate trading galore to most. Day trading markets is not much different the speculating or more like gambling, unless this done by experienced professionals.
Again and again the too often Thai experience here is told of a novice investor whom just got some capital, say from a one time land sale -or an inheritance. Being upbeat and open minded he/she decides to own a few good Thai shares. While he/(she) can’t spell it out what he is hoping for are some higher then bank interest and or maybe even some capital gains at some point. His expectations are often realistic at least inherently so. He so visits one of the 37 brokers here who after talking to him for a while quickly determines this person’s level of understanding of stocks. If he is experienced and knows a bit about the whole thing, they back off and recommend what they think are companies with investor merit. If he is a total novice, like most, they just induce him to day trading. Even at time giving a large credit limit, which is like margin, so he can hang himself that much sooner.
Marketing officers here as they are called say things “like nobody invests here for dividends…we make gains by trading”. After a few profitable trades (call it beginners luck), they churn the account until the losses invariably mount. Often this just happens by selling the winners while holding on to the losers. In the time this typical novice (multiply this thousands fold) and he has a portfolio of losers. One day he realizes he has a huge amount of paper losses and can’t live with that remorse, maybe his spouse gives him a hard time telling him to “cut the cancer”. He so sells out at a loss and closes the account in tears. He then tells his friends and everybody that “Thai SET is no good” and stocks are nothing more then playing/gambling. Bad mouthing the exchange and stocks, instead of the broker and the strategy there sanctioned. Of course he never again returns to shares for his investment needs.
Something like this has happened so many times that this industry has earned a bad name accumulated over many years. That is why new broker accounts have not increased despite rapid increases in the Thai economy. Its the perception that matters...and why all Thai people, when you tell them about shares, say: “oh you play in stocks?” Realize the Thai market is “developing” and only around 35 years old and so there has not been a time to evolve an equity culture like say in the US. But too many Thai brokers are at fault for directly or indirectly inducing churning, regardless of rule number one -and their inherent investor objective.
Currently at last, some brokers are asking clients to fill out a SEC/SET required suitability one page form which shows the investor experience and supposedly their investor objective. It seems too little too late as the industry has the entrenched bad "gamble" reputation. Its shameful because Thailand has trillions of Baht in Bank accounts, just sitting at lowest Thai bank interest rates for years already.
A metaphor:
Imagine a coffee business where reliable studies show the number of people drink more coffee, per capita, -and there are more people. Yet, this companies’ coffee sales remain stagnant. Because.. well most don’t like their coffee which often makes them sick, and so after a while they bad mouth it to others. Not realizing it maybe the company's ways, not the coffee. Yet for the company, it remains mostly business as usual.
Best Regards,
Paul A. Renaud.
