The Thai Stock Market
Although there are some 834 companies listed on the Thai Stock Market, only around 650 are actively traded. Around 10 of the wealthiest and powerful Thai families effectively control the That stock exchange, and thus the economy. The “big boys in Bangkok”, as they have been called, hold the majority of shares that are listed.
Thailand is unlike the UK, for example, where wide share ownership is encouraged. Share ownership is spread widely over the whole population.
In Thailand, the average Thai keeps land and cash as their main assets. If they do deal on the stock exchange, they day-trade, they hope to make short term gains. You can see, from the image above, the relatively small quantities of buy and sell transactions, “bid and offer”.
Thais don’t normally hold stocks for the long term for wealth creation or dividends. There is no capital gains tax on these small transactions, (in fact even large investors can find legal ways to avoid that tax). Thais, as I have often said before, generally live only for today.
The future, they believe, will take care of itself. Perhaps it is the well-established Buddhist concept that you cannot control your destiny in life. You rely on being born a “better” and wealthier person when you are re-born.
Thai Brokers and Research of Stocks
Most Thai brokers have little knowledge of the companies that are listed in a stock portfolio. They see their role as facilitating the buying and selling of the stocks which you own, “churning” your portfolio and getting a commission each time.
Although the Thai stock exchange provides a service called “IAA Analysis” which is a consensus of brokers’ views on stocks, it is typically full of errors as data is input manually and not from actual records of transactions. Research, by contacting company directors, visiting their company operations, and asking questions, is not seen as important.
Some companies, KGI for example, are never researched. They are, for whatever reason, out of favour with those tasked with providing unbiased information to investors.
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