This article will answer numerous questions include:
- How to invest in stocks from Thailand? This is for both people living outside of Thailand, and those inside .
- Is it a good idea to buy stocks in Thailand?
- How about for people living in Thailand who want to invest in internationally markets like the S&P500?
- Is it a good idea to invest in emerging and mid-income stock market indexes in general – so not just Thailand but a broader index?
- What can China’s poor stock market performance, despite going from an emerging market in 2006 to a mid-income country in 2020, tell us about some other countries like Thailand?
- Would more frontier markets, like Cambodia, and specifically Cambodian real estate, offer a good alternative?
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I will use some of my answers from Quora.com, where I have received over 215 million answer views in the last few years, to summarise my point.
My general point is that GDP growth and stock market performance isn’t usually connected.
So, even if you are bullish about Thailand’s future GDP growth or not, that shouldn’t influence your portfolio.
Moreover. broader diversification makes more sense, as opposed to picking a specific market like Thailand.
Table of Contents
Can foreigners purchase stocks in Thailand?
Yes. To buy Thailand-based funds, you just need to find a broker that will accept you and gives you access to Thai-based investments.
A lot of the famous DIY brokerage houses like Interactive Brokers have Thailand funds or ETFs that partially track Thailand.
Ultimately, there is no need to hold a huge allocation to Thailand. Can just find an online platform which includes limited emerging markets exposure, no matter where you live in the world.
Or alternatively some Asia-pacific or South East Asian funds have allocations to Thailand.
How can I buy stocks from the US while in another country?
It is a very simple process. It depends matter if you live in India, Thailand or Spain.
All you need to do is:
a). Find a broker that can accept you given your country of residency. This is easy unless you live in Iran, Iraq and a few other countries where DIY and other brokers won’t accept you
b). Do the application forms and verify your identity
c). Invest the money and trade
You don’t need to physically have the money in the US either, to invest in US markets.
There are many Irish, UK and Canadian domiciled US funds. In fact, as a non American resident, you should be careful with investing with a US broker due to tax reasons.
Is it risky to move from broad geographical diversification into investing mostly in less developed markets?
- Emerging markets have more small retail investors and less institutional ones
- The average performance of MSCI Emerging Markets hasn’t been stronger than the S&P and developed world markets
- Now sure, there are some years where emerging markets produce much more, like this example below;
- However, the overall trend is that higher GDP growth doesn’t always translate into better market performance
That last point is the key. If you were accepting more volatility for higher returns, then great.
Why care about some awful years of -40% growth if the overall trend, over 30 years, is likely to be much better than the S&P and other developed markets?
The reality is different though.
Are countries in Southeast Asia good for investing at the moment? Why?
Above is a trading floor. It is one of thousands around the world. What am I getting at here?
We all have the same information. I lived in SE Asia (Indonesia and Cambodia) for more than a year.
I didn’t gain any knowledge living “on the ground” that couldn’t be gained from proper research.
So a lot of people get excited by stories, but all of the positives and negatives of investing in a particular sector or country, are known by the market.
So if Cambodian real estate or Thai stocks were such a buy, why isn’t Buffett, Soros and all the other institutional investors running to get a slice of the action?
This question was asked 5–6 years ago, and in that time, many SE Asian countries have seen lower growth than expected, bad currency performances apart from Thailand and sub-par stock market performance compared to the US.
There are 1,001 reasons for this. Many of them were impossible to know in advance.
Who could have known that the oil price falls in 2014–2015, would affect Indonesia and some other places so much?
Who thought 5–6 years ago that Duterte and some other populists would get elected?
Who expected Ireland, then a member of the PIGS alongside Portugal and Spain, to be growing faster than many SE Asian countries?
Too many unknown unknowns to keep predicting winners. Better to just get international diversification from MSCI World and MSCI emerging markets.
At least SE Asia isn’t that bad. Over 10 years ago, I kept hearing people telling me that Tunisian and Egyptian real estate and stocks were definitely a buy!
That included many people that regularly appear in the media.
Is the Chinese stock market a safe place to invest?
The recent performance has been weak. That does mean Chinese Stocks look undervalued.
However I would be careful. Chinese stocks are riskier than their counterparts in the US and world.
A small allocation to China from MSCI Emerging Markets is fine. No reason for a huge allocation though; 10% in emerging markets which will include 5% in China and Hong Kong.
Firstly, individual stock picking is never safe, in any country, as so many things can go wrong.
In emerging markets, there are additional corruption risks. Moreover, the Chinese market is like the American market in the 1960s…..most of the investors are retail.
Or perhaps the 1920s would be a better example. People want to make a quick buck. The market is prone to speculators mania.
With that being said, there is nothing wrong with having a 10% allocation to emerging markets, which will mean having a 3%-5% allocation to `Great China`, including Hong Kong, which is a more mature stock market.
The Chinese Market looks cheap too, but the market isn’t stupid. The markets may not be efficient, in all circumstances, but they aren’t stupid.
Chinese stocks look undervalued for a reason – the market is taking into account the higher risk.
Emerging markets property is also risky. That isn’t isn’t to mention that many Chinese innovative, like Alibaba, IPO in the US.
Most American firms also make most of their revenue overseas. So no need to invest directly in China to benefit from any growth there.
Amid this new recession caused by the coronavirus, what should people be doing with their investments?
This answer will save you a lot of hassles and especially worry.
The last 19 months (2019+2020) should have taught people once and for all, that to quote Buffett, “stock market forecasters exist to make fortune tellers look good”.
Let’s have a rundown:
- January 1, 2019. The stock market had its worst result since 2019, down about -6%. Its first negative year for a while but more importantly, it started the year well. It fell by 20%-25% in December 2018–2019. There was a panic then that few people remember. People weren’t expecting much from stocks for the rest of 2019.
- December 31, 2019 – the stock market in the US went up close to 30%. Less than 1% of forecasters thought that would happen
- February 2020 – The Dow, S&P500, Nasdaq and some other markets hit records despite the virus getting worse and worse in China and Korea.
- March 2020 – stock market panic due to lockdown more than the virus perhaps! Again few say lockdown coming! Stocks fell about 35%-40%. That isn’t unprecedented but the speed of the falls was faster than ever before.
- April 30, 2020 – stocks have had a great month, clawing back large chunks of the falls. Some US Markets are now just 15%-20% away from their records, and still higher than they were in 2019. Countries that are coming out of the virus better and had no lockdowns (South Korea and Taiwan as two examples) are seeing worse stock market performance than the US and some European stock markets. This is despite the fact that these areas are mainly under lockdown, with worsening death rates. So we can’t read too much into this, and “trade upon news of the virus”.
The point is I don’t know one person, even one, that predicted all of these 5 things.
I don’t even know a person that predicted 3 out of 5 correctly.
If we go back further to how shocked most people were when markets went up strongly after Trump’s election, and we see the same pattern.
That pattern is many people get 1 prediction right. Plenty get 2 right.
Some even have a 50% strike rate at best. I am yet to meet even one person that can outsmart the market for a very long period of time.
So what can the average investor do?
Stay calm. Buy and hold + rebalance. Be excited by any market falls but don’t wait for them by having loads of cash.
Listen to sensible advice and not the news media. Be ultra long-term. If you do all of those things you will be fine.
It isn’t like there is much of an alternative with cash paying even less than before and markets have always rewarded people who are patient.
$10,000 in the S&P500 in 1945 would be worth about $50m today. $10,000 in 1990 would be worth about $120,000 today. Even adjusted for inflation these are huge figures.
People get into trouble when they try to outsmart the market and be too smart for their own good.
And as an aside, there is no clear correlation between GDP growth and stock market performance.
In 2018, the US reported its best GDP figures for a year, but the stock market’s performance was worse than in 2017 and 2020.
Likewise, China had good GDP growth from 2006, but awful stock market performance.
Often in the short-term, the market is driven by sentiment and speculators – speculators speculating on what other speculators are doing and saying to quote Vanguard’s Founder Jack Bogle.
The long-term investor needs to see through the noise. Invest today for the long-term and you will be fine.
Is the Cambodian property market worth investing in?
Depends. I would make an obvious point. An investor can only make a decision based on the information he or she has available at the time.
Look at China’s property market. Has been great for many investors, but who could have predicted that the Chinese Government would stimulate housing after the financial crisis?
Housing was going up steadily in China. Then suddenly after the Chinese Government became worried about exports to the West, they wanted to stimulate consumer demand, so they.
Housing in Cambodia has the following risks:
- Government risks. Self-explanatory. That could also include the risks of taxes on foreigners or householders in general
- Social risks if Cambodia starts to have a backlash against foreign buyers, which is already happening against Chinese and could spread
- Low-return risk – at least relative to the markets
- Liquidity. This is huge. I met one expat in Cambodia who boasted that he, quote, had made ‘300% profit’. Then he couldn’t find a buyer for the land. That is land not property, but property also isn’t easy to find a buyer
- The Cambodia real estate market is very unregulated. Many horror stories.
I would stick to international investments which have had a track record of 200 years of success, like the US market.
Investing 5% of your net assets in a home, rather than an investment, isn’t as risky obviously.
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