Last year, the Thai stock market dropped close to 1,000 points but has since recovered. How attractive is it now? How do VI investors view investing in Thai stocks compared to popular foreign markets?
Thairath Money summarizes key points from Money Issue EP. 74, featuring two experts, Lin-Weeraphong Tham, a VI investor and former president of the Thai Value Investors Association (ThaiVI), and Best-Kittisak Khongka, a writer and owner of the Investing Science page, sharing their investment experiences and techniques in today's market.
Starting with Best-Kittisak, he said he still holds several Thai stocks because recently there were moments when prices seemed cheap. Partly this is because the Thai stock market has not been very popular among Thai investors, and foreign investors are not investing as much as before. In such times, one should look for small or mid-cap stocks with good business models but still undervalued.
"Now, for anyone looking at Thai stocks, they need to find opportunities like this — small or mid-sized stocks not yet discovered, buy them and wait for the day they are recognized. I might look for new stocks like this," Kittisak said.
His investment style sees Thai stocks differently from foreign stocks. Foreign investing requires picking very good stocks, buying at reasonable prices, and holding long-term. For Thai stocks, one might choose moderately good quality but still growing stocks, with very low prices. When they reach a certain point, consider selling to find new opportunities with better potential.
"I think the playbook for investing in Thai stocks now is to buy at very low prices, then when they rise to a certain level, I look for other opportunities — whether there are better options or if it still fits," Kittisak explained.
On the other side, Lin-Weeraphong said he views Thai stocks similarly to foreign stocks, focusing on fundamentals, price, and the right timing to buy. Even though younger investors almost ignore Thai stocks as boring,
"Sometimes investing is just like that — the boring parts might actually hold good opportunities," Weeraphong said.
Overall, Thailand's economy is growing slowly but steadily, which could be a strength. Dividend stocks stand out in the Thai market, suitable for those seeking continuous cash flow, dividends paid in baht, with some able to claim tax credits. Additionally, information is easier to understand and access in Thai. The key is to find and select rising stars.
Especially during sharp declines in Thai stock prices in past years, if you get good, truly undervalued growth stocks, you can hold long-term. Initially, plan to treat Thai stocks as a safe haven or backup, but ultimately the most important factor is choosing good stocks that fit your risk profile.
When asked how to identify good stocks or assess their true value, Lin-Weeraphong shared his technique:
1. Avoid loss-making stocks and those too futuristic (or beyond investor understanding).
If a company is still loss-making or too futuristic, the business might be unstable and profit margins uncertain. Such stocks should be excluded initially.
2. Have an appropriate Price-to-Earnings (P/E) ratio.
The P/E ratio is crucial for investors to determine if a stock price fits their plan and to gauge the price they are willing to pay.
3. Conduct thorough, comprehensive analysis.
Before buying, analyze the industry overall, consumer behavior, business trends, product/service demand, and competitive strength including switching costs. This helps confirm if profits and cash flows are genuine and the business's growth potential.
4. Do not cling to old frameworks; continuously update knowledge.
Investment biases can always occur. Therefore, previously learned mindsets may not always apply 100%. Investors must constantly review themselves and gain new knowledge to select quality stocks with growth potential.
Ultimately, the heart of long-term investing is selecting stocks with solid fundamentals, steady growth, and profits, and managing your portfolio to align with your life goals.
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