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Thai based expat investors: what percentage of your portfolios are invested in the SET?

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4 hours ago, vukovar77 said:

China is not open stock market at all.What are You talking about?You can only trade with ADR in USA which are not stocks.

I "play" in various stock markets all over a world more than 23 years and I am well and "alive"!

And You?I think You do not  trade of any stock market,cos Your knowledge about stock trading is  very poor.!

Well, since I spent 25 years on Wall Street, doing quantitative analysis and building real-time trading systems based on arbitrage and stochastic algorithms, I know not to risk my hard earned money "swing trading".

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For someone thinking about FX and stock (and bond) markets:

 

For FX rates and stock (and) markets the interrelationship can be complex.

 

1) For THB, though, a couple of things:

 

When THB is strengthening/expected to strengthen, global investors/ foreigners look to invest in THB assets. This investment can take various forms, but when global foreign investors look for financial assets because of a strengthening THB they look at the THB bond market, and the Thai equity market (to a lesser degree than bonds). This tends to create a positive correlation between Thai Financial assets (bonds and equities) and the THB. The strengthening THB provides support to financial markets that might otherwise be weaker

 

So if THB is strengthening, Thai equity marketing is rising and wealth being created in the country, there's a risk of you not being invested and missing out. As wealth is created prices increase etc.

 

Do you want to be in a situation where Thailand's wealth is increasing but you might be left behind? i.e do you want to risk missing the boat? Others in Thailand getting wealthier, prices rising, etc but you not doing

 

Conversely of course if THB is weakening, demand for THB financial assets tends to decrease. Result wealth is decreased. Now if you share in that, yours does too to an extent (though you still have your offshore allocations). Personally I can live with that as it puts me in the same boat as Thais, and relatively I'm not worse off.

 

The risk that concerns me more is Thailand getting wealthier and me not sharing in that. Hence the Thai equity investments

 

2) Most other currencies and their stock markets - have similar themes to above

 

3) USD is something of a unique exception. When stock markets around the world are tanking, and financial assets are tanking, there is often a flight to USD and USD assets (particularly USD bonds). Because (for now) USD remains the world's reserve currency 

 

[BTW This is why US expats often think currencies can hedge equities exposure. It can to an extend for them, but they're the exception rather than the rule, and they often overlook this don't apply to other expats)

 

Result:

 

- In addition to having THB assets in my portfolio as above;

 

- I find it useful to have defensive assets denominated in USD. That way if THB and SET and other currencies and their indices are globally in a crisis together, you have some safety in defensive assets denominated in USD


 

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For me if thinking about portfolio allocation. It would be a bit more complex, than Andrew Hallam but here's some thoughts: 

 

1) THB value of THB cash to weather tough times. THB Bonds at the moment are unattractive to me, but possible in future. This is the only category for me that isn't a %. It is measured in number of years outgoings/ expensive. So your portfolio %s could be after ensuring this.

=> Ideally 1 year minimum. More comfortably 2-3 years, but depends on the risk allocations of other stuff/ overall

 

2) % in Thai equities

=> Me 25% to 35%

 

3) % in defensive assets, including USD and USD lower risk assets and cash, bonds, or defensive multi-asset funds etc. 

=> Me around 10-15 %

 

4) % in global equities = developed markets. Note: includes a specific allocation to the UK for me as a UK national

=> balancing fig

 

5) % in developed market bonds - but could be also covered in 3) or hold more cash. 

=> I include in the 10%-15% in 2)

 

6) % in Asian/EM equities. Think about the overlap though as Thailand is Asian and EM, so look closely with 2) 

=> balancing fig

 

7) % in Asian/EM bonds. You could ignore this completely to simplify

=> Me very little. Though some funds I hold do have some holdings

 

8 ) % in other/alternative assets such as REITs property etc

=> Up to say 10% max

 

Basically global and Asian equities become the balancing figures.

 

So I have 5 main categories (bold) and THB cash. I have sub-categories but that's another story 🙂

 

-----------------

 

Comparing to Andrew Hallam's allocation (whoever he is):

 

Thailand Equities: 32.5%

Global Equities: 32.5%

Asian Government Bonds: 35%

 

while %s are debatable. I'd say his model has the following flaws:

 

i) Omits THB cash/bonds to ride out tough times

 

ii) All of those are risk assets for the event of a global financial crash, when things hit the fan. Asian bonds for example could well see the currency becoming unpopular and money pulled. The correlations between them could be too high in certain crash scenarios

 

ii) Various financial investors will retreat to USD and developed market bonds for difficult times. There is no exposure to those in there

 

iv) Omits alternative assets, eg property/REITs, possible commodities etc etc with low correlation to equities

 

Summary:

- Some allocation to Thai equities and global equities makes sense, but just Asian govvies on top doesn't provide proper diversification in my view and there are some big gaps

- His portfolio would have been stuffed during the Asian Financial crisis of the 90's, and would have offered little or no protection during that time

 

When constructing portfolios it can be useful to stress test them. Or at least think how they would fare on 1) crisis that happened in the past eg AFC, GFC, and what if they happen again 2) things you think could go wrong in future.

 

Not sure who Andrew Hallam is to be honest. But strikes me more as someone who writes stuff and simple models to sell his books, rather than us people who actually live this in practice or professional 🙂

Edited by fletchsmile
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Zero in the SET.

 

Thailand is like China - a handful of inside traders of influential Chinese-Thais manipulate the market for the benefit of a very small group of Thais. You can make money, but there is enormous risk as the market is completely opaque with no recourse for fraudulent investment schemes.

 

As Westerners, we have most of the industrialized world outside of Thailand to invest in, so there is not a great argument for investing in Thailand. Unless you have substantial connections and can benefit from insider trading.

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On 9/12/2019 at 9:25 AM, Kurtf said:

I don’t own any stocks but instead I have tied the majority of my savings in physical gold. That way I can easily increase my holdings or sell on a moments notice and never worry what the value or the economy in Thailand or America my home country is doing.

 

Brilliant when people wax poetic about this.

 

So you keep the gold in a safe deposit box where?

 

I buy kilo bars just because they are so easy to move around and liquidate 

when needed:

 

https://www.apmex.com/product/11934/1-kilo-gold-bar-various-mints

 

 

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On 9/12/2019 at 9:25 AM, Kurtf said:

I don’t own any stocks but instead I have tied the majority of my savings in physical gold. That way I can easily increase my holdings or sell on a moments notice and never worry what the value or the economy in Thailand or America my home country is doing.

 

dog.gif

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Definitely need more successful investors here :D

If I crash my car so often, I wouldn't say driving or automobiles are dangerous. I would question the driving skills and how one person can improve to become what is known as successful.

 

Investing requires the correct mindset, to be able to work with set protocols. Long story short, get to know the fundamentals of the company you are buying, once you have filtered out 100 companies down to 10-15, these are the ones with positive revenue growth in double digits and their respective net profit growths.

 

Next is the timing. Often times, many people ask the "pros" which stocks are the "secret must buy stocks". Even if they told you, you would still be losing money. It's when you enter and exit that counts. Even a blind man can make money in a company that has incur losses for many years, as long as he enters correctly and exits in due time. When is the best time to buy? Wait. Just like fishing. I don't care how much money you have, the stock market is the king, you wait. See a falling knife? Be on alert. Usually 3-8 months later, is the golden time to enter. But never catch it, just let it do it's thing, don't set numbers, don't act pro and guess the bottomless pit number. Months after being on your alert list, you will notice that it's just not falling anymore. It might even be secretly climbing up slowly, get in slowly, divide into 10 batches, buy once weekly. Result? 30-50% gains. Risk? 5-10% max. When it's going up, there's nothing you can do, or any self predictions, to pull it down. That is when you know you are in the right boat.

 

Would I invest in the SET? Sure why not. Would I listen to someone who doesn't invest? Or failed? Of course not. I wouldn't tell someone to not drive a car, just because I never had a driving license or crashed on my first day of driving. But are there better investment opportunities right now besides the SET? There are plenty, because recent SET companies are not doing as well compared to other countries.

 

Is the SET any different from any other stock markets in the world? Nope. Every country's stock market will always have the same people saying the positives and the negatives. The top 500 richest people in each country, are the ones owning stocks in their respective country's stock market. Do they recommend it? Hell yeah. Will there be people saying to stay away from stocks? Always, they exist for thousands of years, and they continue to never touch stocks. Any of them in the top 100,000 richest? Nope. But yet continue to spread the word to stay away.

 

Stocks are real, do your research, time your entry, allocate as much as possible. It's better to buy 7-11 shares in 10 different countries as opposed to only in Thailand. Reason is, if corruption does occur, your loss is 10% max for each company. Allocation is very important not to increase your gains, but to limit your losses when they do occur.

 

Kurtf, you are a very rich man with your gold :laugh: Recent surge is very impressive. I hold some gold etfs as well, came into good use for the recent months. Let's see how it goes from here on.

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Many thanks to all those board members who took the time to respond with constructive posts, with special thanks to Fletchsmile and Misty for the detailed input.

Much appreciated.

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I have about 20 % of my worth tied up in Thailand through SCB mutual/index funds.....simple platform to use to buy and sell when required.

SET and SET50 tracks the thai stock market has been doing ok for last 4 or 5 years.

Have large portion tied in up SCBSE and SCBDV purely for their divided payouts.

Another big position tied to SCBSP500 which pays close to 4% in dividend as well as some other smaller plays with korea ,india , euro index funds.

 

Its 10 times easier than dealing with mutual funds here opposed to back in Europe....verifing you ID, residence, source of funds, having to send written instructions to cash out etc etc

 

My biggest worry would be as we are only guests in the country there is always the possibility that you have to leave country in a hurry... 

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On ‎9‎/‎18‎/‎2019 at 6:43 AM, William Osborne said:

I have about 20 % of my worth tied up in Thailand through SCB mutual/index funds.....simple platform to use to buy and sell when required.

SET and SET50 tracks the thai stock market has been doing ok for last 4 or 5 years.

 

How do I find index funds? I use kasikorn to invest. What are the fee´s on these?

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21 hours ago, EdrigoSalvadore said:

How do I find index funds? I use kasikorn to invest. What are the fee´s on these?

Where are you looking to buy from and which index:

 

If Thai index and focus on Thai equities

 

Within Thailand

- TDEX is the longest running and most liquid Thai equity ETF. Charges are around 0.4% and one of the cheapest. Can be bought thru any broker

- But there are a couple of dozen more

 

There's a full list of ETFs on the SET here in this screener. Most are Thai equities, but there are a few others like gold, china etc. Some are very small in size so you would have to be careful on liquidity if buying large amounts

 

https://www.set.or.th/set/etfscreener.do?language=en&country=US

 

Outside Thailand - Thai single country ETFs:

Fees are a bit higher at around 0.5% give or take, with 3 main option

- THA - iShares MSCI Thailand . USD denominated. Traded on NYSE Arca. Liquid fund with reasonable volumes. But the big disadvantage is it's US domiciled pays a dividend which is inefficient for tax for most people. The div is about 3%, so you will lose about 0.45%-0.9% (15% to 30% of that div) in witholding tax (WHT). This is because depending on your nationality, tax situation, DTAs and how well your broker process all those and W8BEN forms etc you lose 15% to 30% of any div in WHT, so represents an extra cost. This undermines its low cost option. eg as a UK or Thai national with a valid W8BEN you can take advantage of the double tax agreement and have only 15% WHT tax deducted instead of the default 30%. Various brokers don't want to bother with the admin side though so just take the default 30% and won't let you get the 15% reduced rate thru them.

- XTrackers MCSI Thailand. USD or GBP and maybe other versions available from memory. Traded on various exchanges like LSE and SGX. Less liquid. LSE is probably the best it is traded on in terms of liquidity, SGX one of the worst

- Lyxor MSCI Thailand. EUR denominated. Traded on Paris stock exchange, and possibly XETRA from memory

 

Cheers

Fletch 🙂

Edited by fletchsmile
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