Value investing in Thailand has special significance.
Institutional investors often overlook the real stock values in Thailand
Bangkok, Sept. 26 ‘05 – Foreign institutional investors are often misguided when it comes to investing in the real ‘blue chips’ of Thailand!
The mid to smaller caps here are the premium choices with often more stable stock prices, much higher dividend yields and attractive earnings growth. This is a reversal when compared to stocks in the U.S. or Europe, where larger companies are often associated with stableness and attractive dividend yields.
So why does this paradox occur in Thailand’s equity markets?
It is no secret that Thailand’s stock market is dominated by local individual speculators. Local individuals account for some 75% of trading activity on the SET in recent years, according to the Stock Exchange of Thailand Investor Guide. This is an engrained bad habit among local Thai investors who view the stock market as more of a casino than a savings intermediary.
Thai investors are not helped by the local Thai brokers who encourage this trading mentality, only so to encourage more trading commissions. This misallocation of capital causes the investment spotlight to shine on the less desirable sectors and companies of the SET. These companies usually have higher liquidity and volatility but most often have less earnings growth and dividend yields.
With the majority of business news and local broker research focusing on the more speculative sectors of the Thai stock market, a very distorted (and unjust) reputation of the SET emerges. Further broker research reports can often be biased due to conflicts of interest.
The Thai banking sector is a prime example of this bias. The banking sector is the most analyzed sector on the SET. The bank analysts are usually CFA accredited, foreign, and paid top dollar to write well researched glowingly positive reports. This has been happening for the past seven years since the SET bottomed from the Asian crisis in 1998. Yet the bank sector has under performed SET index in most if not all the years since 1997. (This is significant as the SET benchmark index itself is heavily weighted by bank stocks).
Countless foreign institutions have been dragged into the “Thai bank trap”, only to be disappointed time and time again with their average performance. They then leave Thailand questioning its reputation and whether to return.
Better alternatives do exist for foreign institutions looking to invest in Thailand; the only problem is trying to find them.
Paul Renaud, whose firm Thaistocks.com AG has been publishing independent investment research on value stars since 1997, has been trying to challenge the SET’s negative reputation. And this with regularly winning selections.
It’s a fact that only about 100 out of the 400 companies listed on the SET are heavily researched by analysts. Many of the under-researched companies have been outperforming the SET index for years now -and paying attractive dividends along the way. Thaistocks.com helps to fill the void by publishing unbiased research on these under-appreciated mid-cap stars. He visits them regularly in Bangkok.
“When investing in Thailand, institutions should focus on what Thailand does best. The list does not necessarily include banking, finance or communication and/or energy stocks” adds Renaud.
Despite what the Thai brokers may say, there are numerous lesser known stocks that have enough liquidity for select institutions to invest in. For example, last October '04, Mr. Renaud pounded the table on Ticon, a company which rents out some 200 factories in 12 industrial zones around Bangkok. Ticon’s stock has risen over 90% since, while the SET index moved up about 18% during this same time.
There are exceptional opportunities available in Thailand for those who are willing to take a closer look by going beyond just broker reports. We help doing exactly that for over 15 years already.
"On location in Thailand I regularly visit SET listed companies and factories in person and report exclusively to members at the web site my regular insights and investment opinions, with only the members viewpoint and interest in mind".
Paul A. Renaud.
Thaistocks.com AG, Zurich Switzerland.
Paul Renaud, has over 15 years on-location professional experience around all aspects to successful Thai stock exchange investing. He is an ex-Morgan Stanley licensed broker from the US and speaks fluently Swiss German, English and French. His resume and recent track record can be seen at "who is thaistocks.com"