As the Thai stock market begins to stagnate, investors should look for new investment opportunities, which may include investing in foreign stock markets that resemble investing in gold. Therefore, before diving into investments, it's essential to understand and study these 6 fundamental aspects.

“The Thai stock market is starting to stagnate” making trading increasingly difficult. Few listed companies in Thailand have managed to withstand the impacts of the COVID-19 virus, and the Thai government still requires significant time to revive the tourism sector and the export competition, which is a vital artery for the Thai economy, back to its former state. As a result, the investment returns for the Thai stock market rank among the lowest in Asia.

In the investment world, I recommend that we seek additional investment opportunities beyond just the Thai stock market. Investors may feel that investing in foreign stock markets is distant, complicated, and not worth the risks. However, when compared to investing in gold, it appears quite similar to investing in foreign stock markets. Investors who have invested in gold, whether directly or indirectly, cannot deny that this year, gold has been an asset that has helped stabilize their investment portfolios for the second consecutive year.

So, what should investors know before venturing into foreign stock markets? Here are the key points to consider:

1. Understand the economic size of the target country, its driving factors, and which businesses benefit.

We should study the economic growth rate of the country we plan to invest in, how large its economy is, its political system, and how the stock market has performed over the past 3-5 years. For instance, the European stock market has remained stable like the Thai stock market, while the U.S. stock market has shown upward movement. What factors or types of businesses are driving the economy's expansion?

2. Exchange rate of the Thai Baht against the U.S. Dollar

Many are concerned about the Thai Baht when investing abroad, yet they are willing to invest in gold. This means they are already unknowingly exposed to the exchange rate risk between the Baht and the U.S. Dollar. Currently, the Baht/USD exchange rate is close to the level before the 1997 financial crisis, which was 21 years ago. Therefore, the risk of the Baht appreciating significantly from this level is relatively low. As Thailand enters an aging economy, economic growth is slowing, and domestic consumption and investment are decreasing. Thus, I see the current Baht level as an opportunity to purchase foreign assets at a lower price and to diversify risk if the Baht depreciates from this level, as most of the investor's assets are still in Thailand in Baht.

3. Choose a stable broker with a high credit rating and convenient trading system

For investors deciding to invest abroad, your investment is akin to being in the wallet of the broker you choose. If your broker is financially unstable, it’s like depositing your money in a weak financial institution. Therefore, the risks of withdrawing funds or executing transactions will also increase if there are severe financial or economic impacts.

4. Thai investment advisory brokers should provide continuous analysis to digest information for investment decisions. Importantly, Thai brokers should have foreign partners who can access in-depth information for accurate analysis, which will help investors make more effective decisions.

5. Caution regarding access to company information. Investors should avoid investing in companies that are too new, small, and listed on stock markets that only provide information in local languages. I recommend investing in larger companies that you are familiar with their products and services, and that provide updated information in English.

6. Choosing to invest directly in stocks or in ETFs (like a basket of stocks).

Here, investors should assess their own limitations. For instance, if you can understand investments in individual Thai stocks, you can apply that knowledge to make decisions in foreign stocks directly. Trading will incur commissions similar to the Thai stock market, and there are tax exemptions on profits. Conversely, if you are an investor who understands macroeconomic dimensions well and comprehends the main business trends, seeking investments in various companies, whether large or small, investing in ETFs may be a viable option for investing in baskets of stocks within targeted industries or countries, providing greater risk diversification.

In today's world, where we can choose to diversify our investments globally and more conveniently, investors should learn and explore increasing investment opportunities, which will enable us to generate better returns and reduce risks.

SOURCE : www.bangkokbiznews.com