The "incomplete" Investment Guide to Thailand.
Below is a condensed review of the book "Your investment Guide to Thailand". This book could have been that much more.
Here is a timely and unique book as there are ever so few on this subject. An unfortunately incomplete and lacking evaluation as it commands a slightly negative overall bent at times -supported with some just plain missing, wrong and/or incomplete information. Most of all it was authored by a non-investor professional. 
While this author goes to some length researching it all, Bruce Bickerstaff (BB) has no professional investment background -and it shows. The book suffers from a number of outright mistakes, wrong innuendo's and unbalanced views of risks. Here to name just a few:
On page 58 BB brings up the words "imminent" and "inevitable" in the same paragraph addressing the likely decline of the Thai Baht currency. While this supports his general overall tone which is mildly negative if not condescending.. but just plain wrong as the Baht has continued to strengthened vs. the US$, the EU and even the Swiss Franc over the past years.
Thailand's currency has appreciated some 25% vs. the US$ in the past 10 years, from the low 40's Baht per US$, to now around 32 per US$. The Thai Baht, over the past 3-4 years, has also appreciated nearly 10% even vs. the Swiss Franc...and in the past 8 months the Baht has moved-up some 10% vs. the EU. (at the time of this writing).
Liquidity, here is a word BB brings up so very often. Surely "liquidity" is very relative, i.e. Relative to the investor in question meaning the amount of capital they invest. An institution managing millions of dollars in Thailand has a different requirement on share liquidity then an individual investor with a few thousand dollars to invest. Liquidity is so a relative concept, but BB makes it out as if we are all multi-million dollar investors.
In the very first page of the introduction BB warns us that "Thai investment environment is such that foreigners must exercise a higher level of due diligence than they would in their country of origin". OK, but since this book was just published (2010), it could well be added that in recent times the risks of due diligence traps and lapses were far more serious in the US/West, post the financial crisis. Why not mention this?
On page 28, BB is right in telling us that opening a Thai bank account is not always a straight forward process for foreigners, but he shortchanges the reader/individual investor in not explaining that to receive dividends from Thai stocks in Thailand, a Bank acct. is a must. Because brokers here are not allowed to endorse such dividend checks. He could of also explained the investor friendly e-dividend practice here, where such checks are automatically bank deposited.
On page 33 BB writes about the type O-A visa to get a Thai retirement visa along with the 800,000 Baht required deposit in any Thai bank account. But then fails to state that this must be in place for 3 full months before any such a visa will be issued, and this continuously and not for just a few days.
BB says that less then 5% of Thai's invest in listed shares vs. over more then 50% of Australians do. So then, no wonder Thai's are less in-tuned to share ownership and analysis, which he in various other pages speaks critically about.
Chapter 5 reviews the Thai economy and quotes somebody how its "falling into an economic abyss". Yet not once does BB rightly blame this set back on the global financial crisis which was home-made in the US and then exported to Asia from the West! Instead, he so alludes that its all Thailand's shortcoming.
BB rightly states Thailand's situation was worsened by the protests and "airport closures of late 2008 and April 2009", leading the un-informed reader to believe the BKK Airport closed maybe on a number of different occasions. When in fact it was just a very unfortunate likely one-off occurrence; however to be fair it also happened for a very short time in Phuket as well -but this only due to complete un preparedness there. Also, unlike in some western countries Thai Airways or its national rail or bus system just do not go on strike here which akin as an Airport/Rail station closure.
On page 59, BB writes the Bank of Thailand zigzagged on monetary policy with local interest rates rattling-up and then down; but then fails to mention this had clearly to do with the dire foreign events. Global interest rates collapsed due to their induces global financial crisis, and so Thailand was obviously just forced following that global trend.
Again and again alluding his negative bent, while never, but not once, even mentioning the long success value-investor have had here for many years in smaller capitalized high dividend Thai value shares. Is he in partnership with the big mega financial institutions?
One page 126 BB starts out by telling us that to realize gains on Thai stocks you got to add the dividends and capital gains, minus any losses. Sounds right -but this is misleading. One must also add all & any shareholder "sweeteners" during one's share ownership; like stock dividends, freely issued new warrants and perhaps even a favorable rights offerings along the way. By failing to explain this, he confuses the individual novice investor into believing stock investing is all about: "trading through profits and losses" -and so many may readers may conclude they don't have time for that risky endeavor. It implies: churn the shares as the motus-operandi -and one can only hope not to get burned through day trading. No mention of the value investor concept.
Alluding to this, instead of the more rewarding longer term investor view which is: good fundamentally picked Thai stocks when held as a medium or longer term investment likely realize higher total returns, then just net profits/losses realized during the investment term. We can show plenty of evidence on this, but he never sought this out.
Bruce on page 128 writes/shows about historical performance. He explains us how the Thai SET index moved up 10.8% in 2001, and 19.9% in 2002, ranking Thailand the 8th best in that year. OK, fine, but then omits that in year 2003 the SET index increased over 100%, so that year being the world best performing stock market that year! Why not mention this? Even while a few lines later he makes sure to mention that the SET has lagged other exchanges for the past 5 years -and then dares to predicts how this is likely to continue. How wrong that was as in the 4 years to follow the SET index doubled.
BB states well the various distinguishing favorable features when investing in shares, but alas then omits one of the most attractive one. Compared to real estate or other fixed investment assets, shares can easily be divided-up and so not need not be sold without the restriction: “all or none”. Ease of divisibility of an investment asset as time goes by is a valuable tool to all individual investors. BB mentions as a first advantage liquidity, but then fall short to add as well, divisibility.
It is unfortunate that the very target market this books addresses, individual investors, does not point out the clear advantage individual here have over the larger institutions. Yes, they must chose carefully, have a medium term horizon and focus on high dividend paying growth stocks, not be brain washed into becoming liquidity obsessed day traders which he hints is all there is.
On pages 185 to 188 -and beyond, BB explains at length all the well published and publicized data around Thai corruption. Surely hardly missing a beat or number on that, as he says: "Regrettably, a high level of corruption remains as a stubbornly enduring feature of life in Thailand".
BB says how curiosity prompted him to search the word "corruption" in the local newspaper and how this word came up 7504 times, since year January 1, 2000. For pages he goes on and on around this so warning even the most resilient determined investor there. He utterly fails to mention that many stocks here trade at huge discounts to other "less corrupt’stock markets -and so falls into the classic trap of wanting to see the negatives, without balancing the positives: low valuations and very high dividends. This is like comparing two cars' performance without comparing their retail prices.
Far less mega bucks dominant political lobbies here which the West so practices turning it into a near corporate welfare state.
Rightly so, corruption sends shivers over us, especially investors. Yet, I wonder how many times the word lobby or lobbies' comes up in the New York times? As mega bucks lobbying has surely been one of the grave/corrupting offenders of many western societies, to say the least.
Investors and citizens just endured how the US and EU financial system just about imploded on itself -and so the world. As if their governments had not rescued these would have bankrupted the global financial system. Data from the US Federal Election Commission, compiled by the Center for Responsive politics, revealed that political action committees and employees of securities and investment firms gave 156 million US$ in political contributions, just in the 2008 election year. This was 3 times more then the next biggest contributor. At the time, as is now, "the big banks just about run the whole place", and then would have bankrupted it, if their respective governments did not rescue these from the grave.
Wall Street (WS) often writes its own self serving rules, which put at risk the entire global economy. Later, when the day of reckoning came, Washington turned to those very cronies to manage the recovery, in ways that gave WS an amount of money that would be beyond the wildest dreams of the most corrupt in the developing world. Lobby promoted American style capitalism is perhaps more sophisticated as bundles of cash don't change hands in dark corners, but its just as horrific. Since this books publishing we just read how Goldman Sachs, the top rated WS firm, was just implicated on fraud.
To be in balance and fair some of this needs to be brought up in contrast, as investors have all kinds of traps lurking around and surely Thailand has many positives which the seasoned investors here have learned to value. Not least above average growth rates, low stock valuations, high cash dividends and very competitive in a number of industries, yes far beyond tourism and agriculture. But you won't find much of that in this book. Surely it could have been that much more.
Best Regards,
Paul A. Renaud.
www.thaistocks.com
