Unit 6: Foreign vs. Local Shares

Unit 6:  Foreign vs. Local Shares

Type of ownership of shares to non-Thai's.   (Updated on January 2, 2022).

As a non-Thai national, Thaistocks.com always recommends to own either the NVDR (R) or, as a second alternative the (F) shares.  Again, as a non-Thai you can own either the foreign shares (F), local shares (L) or, so called NVDR's (R).  Non-Thai's must not own the Local (L) shares.

If you want to own (F) shares which gives you shareholder voting rights, call your Thai broker and ask about the market price of a certain stock you are considering for long term investment into (F) shares.  Simply ask:  Are there any (F) shares still available on this particular stock?".  The broker will check and reply yes or no.  The broker is simply checking if the pre-determined foreign ownership limit on this particular stock is still available.  While foreign institutions are restricted in buying and selling only the foreign shares; foreign individual investors (Non-Thais) on the other hand can chose either R or F shares.  Yet another advantage to individuals. But some caution is advised.

Converting NVDR (R) to Foreign shares.  This is possible but most non-Thai investors do not chose this option.
Once you have confirmation on the purchase of your NVDR (R) shares, (if you chose) instruct your broker to convert these to (F) shares right away;  again, this can only be done as long as the foreign limit has not been reached.  On your Thai broker statement you can see your foreign shares, as they will have an (F) indicated right next to the stock symbol.  Currently many good shares in Thailand are available for (F) registration, as the stock market has been more stable.  The key/core advantage in owning the F shares is that you can vote at the annual sharehholder meeting.

(F) shares can always be sold on the local board (L) so there is never a risk at all in converting your Thai stocks into (F) shares -or back into (R) shares.  Before selling (F) shares just tell your broker these are (F) shares when you give them the sell order  -beware likely there is a need of a form signed.  Again, Foreign shares voting right is the only advantage, as NVDR (R) shares receive all shareholder benefits, stock or cash dividends, free warrants or other so called shareholder sweetners.

As the SET market heats up again at some point the foreign limit on popular Thai shares (F) can get maxed out.  This is because most all SET shares have a pre-set maximum limit on foreign ownership.  In past bull markets foreign institutions paid at times premiums for Thai (F) shares. Less so now as the case due to desirable alternative in foreigners owing the NVDR shares; as these do deliver all shareholder benefits - again except the right to vote.

For non-Thai investors, Thaistocks.com views to register Thai shares you hold for investment into your own foreign (F) name or if not, then only hold the NVDR (R)shares.  Here is the key:  Foreigners, other than day traders, should never invest or hold the local (L)  i.e. the non-nvdr shares -as they would miss out on all shareholder benefits.  

There is some inconvenience in holding the (F) shares.  Buy/sell usually needs a paper signed plus a copy of your passport, every time.  Again, foreign investors who don't care about voting rights and want the least inconvenience should only buy/sell the NVDR shares (R).   NVDR stands for Non-voting depository shares, and again they extend all shareholder rights -except the right to vote.  When you enter buy/sell orders always click the box NVDR, so to indicate you are selling/buying (R) shares.  Fund units, on the other hand can only be bought in F name.

Individuals have many other potential advantages when investing on the SET . Thai brokers research is usually on less then say on 100 stocks, of the more than 580 companies listed here.  The potential exists for the discovery of finding real "jewels" -totally uncovered by local or international brokers.  Thaistocks.com mission has always been to find & check on these and point them out to our members as the long record shows since 1997.