Ah, those local Thai Brokers.
Thai SET Investors Beware.
Over the years one of the persistent shortcomings I here witnessed, again and again and over many years, are the often inadequate or biased local research broker reports. I am not just talking about the inherant bias to overanalyze largest capitalized selections, but the often rather poor job done on various secondary selections.
Growth stocks with attractive yields:
Unlike in the US or most other developed countries stock markets, secondary growth stocks here trade at a discount to the local valuation averages, while at the same time often yielding far more in yearly dividends. Growth stocks deserve a premium p/e multiple compared to more mature larger companies, as their earnings are growing faster over time. But not on Thailand’s stock market! This is because they are too often either ignored or poorly analyzed by local brokers" analysts. But more and more investors are catching-on to this shortcoming.
Thai brokers assign their best most seasoned analysts to cover most only the largest of listed companies and leave the rest to the junior staff, with little or no real experience. And while they insist their stock analysts hired have good educational backgrounds -and are enrolled in CFA programs etc..; they make it very clear on the very first day they get hired that "freedom of speech is not tolerated nor practiced once employed here". Hence secondary shares are under researched, undiscovered and so underappreciated. But not underperforming!
The proverbial excuse…:
If by chance an investor group or deserving investing client gives the local broker a hard time for not correctly reporting on a company’s good earnings prospects or likely high dividend yield, their excuse is always: "Well, anyway, this stock does not trade with enough volume to warrant coverage". This is such a relative concept and so too often, just a poor excuse. What is enough trading volume anyway? One could say, trading volume is never enough. And by the way, to whom are we talking about? Not all investors are alike and so not all investors have the same investing parameters nor liquidity requirements. But to those analyst gnomes, tainted and directed by their broker employers, there is always a way-out, by later claiming "this stock does not meet our volume requirement". And if a good stock is suddendly trading with respectable volume levels, like currently Ticon, these same folks then use the pervasive argument that these shares must be manipulated or "played with" and so do not warrant serious attention. So scaring away the legitimate question: why did you miss this good one?
For years, smaller cap selections have overall outperformed the SET:
Yet, few if any report on any of this. As the only professionals whom have the tools to demonstrate/prove this, quantitatively and beyond any doubt, feel it is not in their interest to do so. With the exception of year 2004, various & many smaller cap selections have been incredible investments performers -since 1997.
Certainly, I through thaistocks.com, have long shown again and again that it often pays to look for smaller more tasty selections -and get beyond the broker induced obsession/biase on liquidity or big market cap. size.
Some examples:
While it is not in the interest of this writer to nail down the many specific examples with solid evidence, long time observers have all seen this again and again. Bank stocks, Finance companies, select Energy shares and other large cap’s are analyzed backwards and forwards; but with few exceptions, these have been laggards over time. Naïve or less experienced investors here may conclude the SET market is not well performing. Not so I can tell you. It is the brokers whom are….and more then a few investors are catching on. Finally.
We can report this change with some conviction, as our daily visitor rate has regularly increased, every year, and in fact well more then doubled since we made our service free at the end of last year.
Best Regards,
Paul A. Renaud.
www.thaistocks.com
