Buying a Thai bank stock anyway? This will give you a BIG edge. Buy through a Thai broker, not an American broker. There are several reasons why.
First Reason - Many of the Thai bank stocks have reached their foreign ownership limits, and the "foreign shares" trade at a big premium to the "local shares". If a foreign institution wants to buy shares in a Thai bank, the institution has to pay the higher price for the foreign shares. If you're an individual and you want to buy the shares through an American brokerage firm, you also have to buy the foreign shares. Buy through a Thai broker instead. Many Thai brokers will buy the lower-priced local shares and serve as your nominee to receive dividends and exercise rights. They will also put you in line to convert your local shares to foreign shares when and if they become available.
This can make a big difference. Take Bangkok Bank as an example. Today, Thanksgiving Day, Bangkok Bank local shares closed at 56 baht/share, and the foreign shares closed at 74 baht/share. You'll pay 32% more going through an American broker and buying the foreign shares. And that's before commissions and spreads charged by the American broker, which can be outrageous.
Second Reason - These banks need to recapitalize. Many will be issuing new shares. Because of SEC regulations, many or all American brokers will not allow their customers to take advantage of rights offerings unless the customers are accredited investors (net income of $200,000 per year or net worth of $1,000,000). Take a hypothetical example. A Thai Bank is selling for 50 baht/share. The Bank offers additional shares to existing shareholders through a rights issue at 30 baht/share. If you're not an accredited investor and you're dealing with a U.S. brokerage firm that won't let you exercise the rights, you're screwed. You must either sell your shares before the offering, or else be diluted by the other shareholders who WILL be exercising their rights to purchase the cheap stock.
Reason 3 - Commissions and other Transaction Costs. I'm posting something today about this to the Asia forum. You'll pay a LOT less going through a Thai broker.
Reason 4 - Research. Thai firms offer superior research.
Reason 5 - Thai brokers will allow you to change limits, place and cancel orders when trading is occurring in Thailand. U.S. brokers will not.
With regard to Thai brokerage firms, I use TISCO Securities, and highly recommend them. They are owned in part by Bankers Trust. They are professional and honest. They provide service superior to any American firm I've used. Commission rates are 0.55% if you use the Bangkok office. The Hong Kong Office has commission rates that are slightly higher, but will allow you to trade all the East Asian markets except Korea. The Bangkok office has a minimum account size of around $60,000, and I'm not sure what the minimum is for the Hong Kong office.
A couple of E-mail contacts for TISCO follow:
1. Bangkok office -- Nina --
Narisara_Thongthai@mail.tisco.co.th
2. Hong Kong office -- Praf --
Praf.Eurwongpravit@bankerstrust.com |
