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Where the SET is just the start

In my previous article, I talked about risks of an inflated Thai stock’s share price plunging overnight, and introduced a few indicators that can help determine if a stock is “overpriced”, and thus vulnerable to such negative catalysts. The article was written presuming readers already had a basic understanding of how a stock exchange operates and any references to the Stock Exchange of Thailand (SET) should have been self-explanatory.


Steven Layne

Sunday 25 September 2016, 02:00PM


Both set.or.th and settrade.com (pictured) have English versions of their websites.
Both set.or.th and settrade.com (pictured) have English versions of their websites.

However, I realise that there are many potential amateur investors out there who, like me a year ago, don’t have much – if any – stock-trading experience in their home countries let alone here in Thailand. Therefore, in this article, I will downshift a gear and cover some of the bare basics relevant to readers in a simple Q&A format. Here are some basic questions I think most SET newbies might have:

Can foreigners trade in the SET?

The simple answer is yes, but with some limitations. The easiest way for non-Thais around the world to buy and sell stakes in a publicly-listed Thai company – without even needing to step foot in Thailand – is through an international broker, who will happily charge you a hefty commission to buy stocks on your behalf in any one of a number foreign stock exchanges, including the SET.

However, using an international broker doesn’t really make sense for small transactions, as an expensive commission will factor directly into any gains or losses. There are many Thailand-based brokers who will happily do nothing while earning a small cut of your hard-earned cash, and the commissions are generally reasonable for small transactions. For example, my broker (Kasikorn Securities) charges about 1.7 per cent per transaction (including VAT), meaning any stock I buy has to appreciate at least 3.4% to break even.

All the main Thai banks have stockbroker services but their application requirements may vary for foreigners; some might require a minimum deposit or a work permit, but others may be more lax. Lacking a Thai ID, you’ll most likely have to apply in person.

As for legalities of “owning” Thai stocks, since ownership of Thai companies is generally limited by law of only up to 49%, and shares literally represent ownership of a company, traditionally there has been a quota of how many shares a listed-company is allowed to sell to non-Thai nationals. However, in practice, most Thai brokers enable foreigners to trade real-time and seamlessly irregardless of the share quota, through the designation of Non-Voting Depository Receipt (NVDR) stocks, which are just like normal stocks that can be bought and sold (and taxed) but don’t come with any voting rights in the company itself.

 

How to find and research Thai stocks?

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Knowledge is power, and this is ever true in the SET. First and foremost, being able to read Thai language provides obvious advantages in sourcing the most recent news about the Thai economy, sectors and the company themselves. That said, most SET-listed companies have an English version of their website, and all financial documents are usually published in both Thai and English. When researching SET-listed companies there are two main portals to start from: set.or.th (click here) and settrade.com (Click here). Both have English-language versions. The two websites are similar but I prefer the latter.

As for finding specific stocks, note that there are nearly 600 listed companies on the SET, and dozens more on the SET-run Market for Alternative Investment (MAI). To narrow these down, the companies are all divided into sectors, and further into specific indices, namely: Agro and Food; Consumer Products; Financials; Industrials; Property and Construction; Resources; Services and Technology. You might want to bookmark the indices you are interested in to save time finding them again.

Stay tuned for more in my next missive.

 

See also:

SET to succeed: A ‘crash’ course in the Thai stock market (click here.)


Disclaimer: This article should not substitute qualified “investment advice”. The author does not represent any bank, fiduciary, broker or consultancy of any kind and is merely one individual whose aim is to learn more about investing in the Thai stock market, and share his direct experiences with others, and thus assumes no responsibility or credit for any action or inaction by readers, whether resulting in gain or loss. Serious investors are advised to consult with a qualified financial adviser or fiduciary.

 

 

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