NEVER buy Thai stocks through an American brokerage firm. I've posted a message in the Asia Forum regarding an experience I had recently with Charles Schwab, that's well worth reading if you're buying Asian stocks through a U.S. broker:
Message 6580358
I have a couple of additional examples, relevant to Thailand, of how you're potentially screwed if you go through a U.S. broker:
1. Apparently American brokers, because of SEC regulations, cannot allow 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). One company I own, Chiangmai Frozen Foods PCL in Thailand, recently offered shares to existing shareholders at 10 baht/share. The price of the stock at the time was 25 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 exercise their rights and purchase the cheap stock. This example is particularly relevant if you're looking at buying bank shares, finance company shares, or shares in any company with debt problems. A lot of these companies are going to be issuing new shares through rights offerings.
2. A number of Thai stocks have reached their foreign ownership limits, and the foreign shares sometimes trade at a big premium to the "local shares". If a foreign institution wants to buy shares in such a company, 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 if and when they become available. This can make a big difference. Take Bangkok Bank as an example. Yesterday, 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 and an American market maker, which can be outrageous.
I've posted about TISCO Securities, the Thai broker I use, to this string before. To date, I've executed about 280 trades through their Bangkok and Hong Kong offices. They're professional, honest, and offer superb service. Commissions are a flat 0.55% of the value of the transaction for Thai stocks. Because the Stock Exchange of Thailand uses a computer matching system, you don't have to go through a market maker, like you do with U.S. brokers, if you use TISCO(or any other Thai broker). The minimum account size the last time I checked was around 2 million baht or about US$60,000. A contact in their Bangkok office is Nina:
Narisara_Thongthai@mail.tisco.co.th
If you're interested in trading other Asian markets besides Thailand, a good choice is TISCO in Hong Kong. A contact there is Mr. Praf Eurwongpravit:
Praf.Eurwongpravit@bankerstrust.com
I think you can open an account at either office without actually having to travel to Bangkok or Hong Kong. When I visited various firms in Bangkok last year, TISCO was the only broker that I felt comfortable with and that also had a good history of dealing with foreign retail investors. Bankers Trust owns part of the firm. |
