Some ABC's on getting started.

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 Some ABC's in getting going to proper Thai stock market practices.

From time to time its good to review for some of the more novice members/investors here around proper understanding, regarding practices of buying and selling Thai shares.  This, on how to get and sell shares, rather then which selections to buy or sell.

When you open a new broker account, you can chose the on-line internet trading, or a regular account.  The on-line account charges you a 0.15% commission on the amount, per transaction. The regular account, which means you deal through phone/fax or e-mail, with a live marketing officer, charges you 0.25% commission, per transaction.  If you have an on-line internet trading account you still can call your assigned marketing officer (in case you are not near a computer), but then on that transaction you will be charged the higher 0.25%, per transaction. Thai stock trading commissions will be further liberated next year so these may drop more, due to intense competition.

If you deal with an internet on-line trading account you have to deal with the brokers on-line trading interface web site.  It means logging in with the given username and password and then a pin code to be used everytime you enter buy/sell orders. This should be easy enough once you get going, but again assumes you: 1) catch-on to entering orders correctly,  2) make sure you note the stock as “NVDR”,  everytime (assuming a non Thai investor), and 3) understand the bid and offer concept of stock trading. All easy enough once you get going. 

For example, when a stock is bid and offered at a certain prices, it also always shows how many shares are bid and offered at that price level, and then, the next price levels.  Don’t assume you have to pay this price or sell at this price, you can enter a limit-order at a higher or lower price, or enter a price in between the two bid/offer prices. Yes, stocks do fluctuate and during the day you may well get your price but this is not guaranteed.  One way to check this is by looking at the high/low price of that day. If it breached your limit price, you got it executed. Exact times and prices paid are always recorded in stock markets.

Again, of course you will only get executed if it pierces your entered limit-price level. Also, there is a queue at your entered price level. So if it only touches your price, but does not go through, you may not get it.  Queues are very important to understand, as you line-up depending on the exact time you entered your order.

Any order you enter is only valid that day. And if it was not filled that day, its automatically canceled at the end of the trading session.  Most all broker will then send you an e-mail confirmation at the end of the day, with your confirmations of that day, if any.  If you trade on-line you must understand all this better, as if you enter orders with a marketing officer he/she will explain this to you.  Again, all orders entered on the Thai stock exchange are for that trading day only.  If your marketing officer offers to re-enter unfilled order the next day, its no absolute guarantee as he/she must manually do so.

If you enter orders before the market opens, say a half hour before, you will get a better queues then if you enter orders later. Again, try to understand the time and queue concept.  Also, always remember that unlike a consumer product or real estate, you can easily dribble out of any stock, or accumulate buy a stock at different price levels. Nobody says you must buy/sell what you want, all at once. 

If a stock soars up in price, its usually wise to dribble-out as nobody knows how high something will spike, so try to get an average price. This often wiser then just sell the whole lot at once. Nobody knows how high, high is.  Conversely if you invest in a new selection chosen, try to accumulate buy so to get an average and perhaps lower price.  All this of course depends on the Baht amount you are investing and how bad you want the stock. Some shares are better to just accumulate, like SITHAI, as we don’t know how long it will take to wake up. The higher the amount invested, the more it makes sense to accumulate buy/and dribble sell.  Remember, only supply and demand determines a stock price, nothing else.TVO take a brake

If, as a foreigner, you make the mistake of buying a Thai stock and forgot to mark the NVDR box, you can call the broker the same day and they will change it for you at no cost.  If you notice this error the next trading day you will have to sell it out and buy the NVDR shares. That is, you don’t have to, but realize you will not get dividends as a foreigner, if you own the local shares.  So you got to watch that.

On the Thai stock exchange there are local shares (L),  NVDR shares, and foreign shares (F).  You can buy NVDR shares and as a foreigner, convert them into voting Foreign shares (F) if you want and if there is room left on the foreign limit (usually 40 to 49% of outstanding shares).   One additional advantage on owning foreign shares, as foreigner, is that you get their annual reports and other shareholder information, but sadly so, not if you own the NVDR shares.  You should always trade/invest in round lot of 100 shares; but even a 100 (F) shares will get you the shareholder annual reports and notices. To convert NVDR to F shares will require a signed passport copy and a form signed besides a 20 Baht stamp duty.

Marketing officers here more then most places are trade driven; as this is how they make their living. They want you to trade, just like a Bar wants you have another drink. This can result in bad investor habits, as it converts the rational investor into a trader -and the two don’t mix.  One way around this is to tell the marketing officer you don’t want to trade out your winners and hold your losers (as if so in time you will only have loosing positions), or even better just set up an on line trading account and don’t deal with the marketing officer -unless you have to. The other thing to realize is that all brokers can have some conflict of interest in their research opinions because they may be doing some other/separate investment banking business with the firm they are recommending.

Further, most brokers here don’t recommend nor have research on smaller, often higher growing, higher dividend paying companies. This no matter how much investment merit these may have.  It is so because the institutions are not interested in those and the traders don’t like to trade these, so they can’t earn brokers much commissions. Too bad often there are superior investor choices to be found among these.

Best you look at your Thai broker whose sole job is to get a stock in or out of your portfolio, at a low commission rate. Not as an advisor on what stock to buy.  Of course there some exceptions but this is a good rule of thumb. For the most part Thai brokers are the same as they have always been, trading monsters, not client investor return driven.

I can go on but think this is the gist of it for now to newcomers.  Let me know if something bugs/confuses you.

Oh, one other thing is which comes to mind, if you enter say a sell order at a given price limit, say before the market opens, and the stock opens at a higher price. Then of course, you will always get the higher price, and visa versa. If you enter a buy order at a higher then market opening price, you will always get the (lower), market opening price. Think of it that you always get what was offered for sale or buy, even if it means at a better then your chosen price. So its always fair.  If you get stuck on something or wonder about some practice feel free to pose questions in our lounge or below this article.

Best Regards,

Paul Renaud.