Unit 1: Why Invest in the Thai Stock Market?

Unit 1: Why Invest in the Thai Stock Market? (Updated January 2, 2022).

Over many years the Thai stock market had fabulous bull runs, combined where it then settles into boredom -or adjust down into a correction as it did in year 2008 or in August/September of 2015 and smaller cap stocks in years 2017 to early 2020).  Yet, responsible investors whom stick with it have the discipline to be patient and do their best in owning a group of viable companies have -as long as I have witnessed (over 30 years)- done very well.  Long members here have attested this here again and again.  It also assumed taking profits at times which is part of responsible investing.

There are some key parameters/rules to try to follow.  Don't get going when there is a stock market boom.  I.E. trying to buy high and sell even higher.  Instead get going/invested when the market is subdued and then ride the next cycle-up.  Be patient along the way.  Realize also its a market of stocks, more than a stock market. Too many novice investors await until the news it all good on many levels only to forget that stock markets are forward looking and so much of the good news is already priced-in the share prices.  The other key of course is to own a portfolio of overall solid companies which need to be monitored.  Here I help members as this is what I do full time.

Currently the combination of ultra low interest rates and an economic recovery slowly emerging will result in upward moving corporate earnings and selectively share prices. This especially so to the more astute fundamental long term investors.  Fundamental value investing means owning/choosing overall solid companies which pay dividends and are in viable industries.  Realize, this can and does change over time.  For example of late I much like Thai Optical Group (TOG), which I wrote up very favorable in May 2021 at 5.85.  TOG is in a big resurgence in profits this year, regardless of Covit-19 and declining domestic consumer spending as it exports some 90% of its generated revenues. 

One of the main purpose driving Thaistocks.com is to eliminate the many unknowns, myths and misunderstandings surrounding Thailand's stock market.  The Thai economy is a  diverse economy that has in many ways learned from its past mistakes.  Presently the overall Thai economic growth rate has dwindled to less then 2%, but is still overall  positive besides higher then most developed countries, 2022 promises to be better.  Its becoming more service sector driven then in the past and has some select booming export sectors, in part due to the lower Baht currency and rebounding foreign developed countries.  Many foreigner novices do not realize that Thailand is the world's fifth largest food producer and besides food, is dominant in a number of other industries. For example its a prominent logistic centers for SE Asia...besides a fast growing renewable and base energy sector.  Again, its a market of stocks more then a stock market where some good companies at reasonable stock prices and solid dividends deserved to be owned.

There are a number of key advantages to investing in Thai shares.  Including pure ownership and no Thai capital gains taxes in Thailand to individual investors with stock gains made from listed companies.  Also all shares receive the same dividend amount, unlike in some developed markets where different classes of shares pay themselves different rates of dividends. 

Broker commission rates are rather low at 0.25% per transaction -and 0.20% if done on-line.  There is only a 10% tax withholding on dividends.  Select companies I follow pay dividend rates between 3-8%, or 5 times or more then Thai bank saving deposits.  So you get paid while you wait!

Setting up a trading/investing broker account is easy if done on-location and can be done over the internet & express mail. However its highly advisable to also have a Thai Bank account in place -so to collect the dividends.  Or, investors can set up a US dollar based account in Hong Kong (or other financial centers) and so do not have to worry about currency risk on cash holdings, and for easiest repatriation of capital on the day the sold stock settles for payment.  Commissions however are much higher then if set up in Thailand.  Repatriation of capital and gains back to your home country (if other then Thailand) is never an issue and guaranteed. Most all Thai brokers can easily repatriate funds abroad, in your name.

The key to superior returns is in following more then just brokers' stock market research reports.  As these can be biased or just too often ignore undervalued good secondary companies; this strictly so based on market cap. size:   Brokers and institutions love large liquid companies because they are handicapped to most only analyzing these.  So can ignore some of the best fundamental/value stocks, to the individual investors' peril. Certainly individuals do not have the same share trading liquidity requirements institutions have!

Here then is the key point about lesson 1:  Get invested when things don't look too great as stocks will be less pricey then, but realize its a market of stocks and some will be sold off while others moved higher at the same time. This is where I can help.  Try to get beyond only the over-analyzed large cap stocks, as often higher growth and better dividends besides lower stock valuations can be found in the many leading secondary and smaller or mid cap stocks. This is the real backbone of the Thai economy.  The past 25  years here (and since 1989 myself) has demonstrated this reality besides superior return, again and again.  Interest rates later this year may finally inch up, but so likely will the Thai economy while exports are doing well, overall.  (January 2 2022).