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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Worswick who wrote (3191)	4/17/1998 12:25:00 PM
From: Jethro	Read Replies (1) \| Respond to of 9980

Worswick, I like TISCO in Hong Kong because they're more convenient and only marginally more expensive than using brokers locally in Bangkok and Jakarta. TISCO in Bangkok is a little cheaper, and the only local firm I could find there that would take my business and that had experience dealing with foreign retail (as opposed to institutional) investors. In Jakarta, there are a lot of local firms that will take your business -- just about everyone I talked too. The convenience of using TISCO in Hong Kong comes from being able to have a U.S. dollar account. I wire them U.S. dollars. When I purchase a Thai stock, they convert my U.S. dollars to baht at a very competitive exchange rate. They'll do the same for Indonesian stocks, except that the exchange rate is NOT competitive for small transactions. But they will buy Indonesian rupiah for me from Hong Kong & Shanghai Bank, in larger quantities at a more competitive forex rate, that I can then use to buy Indonesian stocks. There's also the convenience factor. You can admittedly save a little money by opening an account locally in every market you intend to trade, but having visited various cities in southeast Asia to look at this angle, it would be a hassle. I don't own any shares in Mutual Fund Public Company. I visited with someone a few weeks ago, Paul Renaud, who has looked at the company and who thought it was undervalued, but not a stock that he would recommend buying. Paul has a web site I mentioned in post#389, www.thaistocks.com, and he might provide you some insight into MFPC if you E-mail him. I know he would if you're a subscriber to his service. As far as the various mutual funds that MFPC runs, I would definitely recommend you look at those in preference to the two closed end Thai funds that you can buy in the U.S. I haven't really looked into MFPC's funds, but they manage a lot and I think some are closed end funds that sell at a discount to NAV. I can't understand why anyone would pay a 40% premium to NAV to buy a U.S. closed end fund, when you can buy one of the MFPC funds, or buy stocks directly on the Stock Exchange of Thailand. In U.S. dollar terms, I think the bottom in Thailand is behind us. The exchange rate is competitive and the current account balance is positive. I'm staying away from the financial companies and companies with appreciable amounts of debt, and am still able to find companies that look cheap.

To: Worswick who wrote (3191)	11/27/1998 1:10:00 AM
From: Jethro	Read Replies (1) \| Respond to of 9980

Asian Stocks and American Brokers -- NOT!!! I have a horror story that has a lot of relevance to any American individual who's buying and selling stocks listed on Asian exchanges through a U.S. broker. About a year ago I researched buying Asian stocks through an American broker, and came to the conclusion that Charles Schwab was the best of the lot. Although the following relates to trades executed through Schwab, I would have had the same problems with any other American brokerage firm. Schwab, like other U.S. brokers, executes its trades through a separate market maker. The market maker is also an American firm. The largest of the market makers is owned by Merrill Lynch. For orders over $10,000, the market maker will execute the order "overnight" on the local exchange. Although the American market maker still receives a spread on an overnight order, I understand the spread is less than the spread for a normal order. I bought 100,000 shares of an Indonesian company about a year ago through Schwab. The American market maker executed the order overnight, and the price I paid was reasonable, not a lot higher than what I would have paid converting dollars to Indonesian Rupiah and then buying through a local broker in Jakarta. Schwab also deducted its commission of 3%. Getting out was a different story entirely. My initial $20,000 position had shrunk in value to $6500. Schwab's market maker would not submit the order overnight to sell the stock. $6500 was "too small" to execute overnight. At a time when the stock was selling at a 25 Rupiah spread -- 475 Rupiah bid/500 Rupiah offer -- the market maker would buy for US$0.05 and sell for US$0.08! I ended up receiving US$4800 for the stock. I would have received around $6500 if I had sold through my broker in Hong Kong or through a local broker in Jakarta. My broker in Hong Kong would have charged about $55 in commission and fees. In addition, if I wanted to convert the Indonesian Rupiah to dollars (and I did NOT), I would have paid about 1.25% to 2.5% to do so. I'm not including the bid-offer spread in the hypothetical "sell through the Hong Kong Broker" case in the transaction cost of $55, because the Jakarta Stock Exchange uses a computer-matching system. There's no specialist or market-maker. So, I received about $1645 less going through Schwab than a broker in Hong Kong. It cost me 30 times more to sell through an American broker than it would have through a broker in Jakarta, Hong Kong or Singapore. There are a lot of other advantages to using a foreign broker. Foreign brokers will allow customers to have foreign currency accounts, thus eliminating forex conversion costs every time you buy or sell a stock. Foreign brokers will allow you to change limits, place and cancel orders when trading is occurring in Asia. In the markets I trade, the majority of the stocks sell for less than U.S. $1.00/share. Schwab and some other firms charge about a 4% commission for these penny stocks, on top of the market maker's spread. Asian brokerage firms also offer superior research on Asian stocks. Another BIG consideration if you're not an accredited investor is whether your American broker will allow you to participate in rights offerings. I have an example in this regard that I'm going to post to the Thailand forum. I'm using a broker in Hong Kong, TISCO Securities, that's a subsidiary of a Thai brokerage firm and owned in part by Bankers Trust. They trade most of the East Asian markets (Japan, Hong Kong, Shenzhen, Shanghai, Taiwan, Philippines, Singapore, Malaysia, Indonesia, Thailand, Australia, New Zealand) and charge commissions of 1% or less in most markets. AND YOU DON'T PAY A SPREAD TO A MARKET MAKER LOCATED IN NEW YORK. Their service is superior to any American firm I've used. They're professional and honest. I've posted a message about them to this forum once before, and the more I use them the more I appreciate them (especially after this experience with Schwab). I've executed something like 280 trades through TISCO in Hong Kong and Bangkok, so I have enough experience with them now to be confident in my recommendation. A contact with TISCO in Hong Kong is Mr. Praf Eurwongpravit, and his E-mail address is as follows: Praf.Eurwongpravit@bankerstrust.com A contact in Bangkok, if you're primarily interested in trading Thai shares, is Nina: Narisara_Thongthai@mail.tisco.co.th The Bangkok office requires about a minimum of a $60,000 account, while I'm not sure what the minimum is for Hong Kong. I've also heard good things about Kim Eng and Vickers in Singapore. In any event, I'd strongly encourage anyone who's trading Asian stocks to do so through an Asian broker. It can really make a difference in the performance of your account. I've got two more examples, one regarding a rights issue by a Thai agricultural company and another regarding a Thai company that reached its foreign ownership limit. In both instances, your position could be worth 20% or 30% more if you're trading with an Asian broker, instead of an American broker. I'm posting the examples to the Thailand forum.