The Asean Trading Link is an alternative securities-trading gateway allowing regional investment to become more cost-effective.
It is not too hard for people who have experience in stock investment in foreign countries or offshore trading to seek higher returns and diversify risks beyond their homeland.
Global investment has been quite popular among the wealthy for more than two years, especially in US equities due to their attractive prices.
The Asean Trading Link uses offshore trading. It is almost like a global trading service, requiring marketing staff to process orders while offshore trade customers are able to trade online or via marketing officials.
There is no capital gains tax for investors, but if they trade stocks via the traditional trading system, then they must pay tax when they transfer money back within the same calendar year.
At present, the Asean Trading Link comprises Singapore, Malaysia and Thailand, accounting for 70% of regional trading volume, and it will extend to seven bourses in the future.
"It's a good opportunity to improve portfolio returns with regional expertise or buy exchanged-traded funds that are listed on the Singapore Exchange (SGX) without management fees," said Siriporn Phonpho, an assistant vice-president of Thanachart Securities.
Some attractive stocks on the SGX are Genting Casino and Biosensor, the world's fourth-largest medical equipment company, while Malaysia has Telecom Malaysia, the owner of KL Tower.
Kosin Juasiripukdee, Finansia Syrus Securities' vice-president for foreign markets, said Singapore is strong in banks such as DBS, UOB and ICBC, telecommunications companies such as SingTel and StarHub, and agricultural firms such as Golden Agri and Olam International, the world's largest cashew nut supplier.
Malaysia has strong bank stocks such as Maybank and CIMB, while Sime Darby is an interesting plantation company.
Which brokers offer the Asean Trading Link service?
Nine brokers (see table) have the service. Five have both offshore and Asean services _ Finansia Syrus Securities, Thanachart Securities, KT Seamico Securities, Country Group Securities and Maybank Kim Eng Securities.
What are the types of account?
All foreign securities-trading accounts must be opened with a cash balance. Applicants must complete applications and a Know Your Customer form. They must wait about 10 operating days for approval by the Bank of Thailand to take money out of the country.
Most brokers do not require a minimum amount to open an account, although UOB Kay Hian Securities requires 500,000 baht. Some brokers such as KT Seamico Securities require financial documents from investors to show they have assets worth at least 1 million baht.
Other details vary from broker to broker. For example, Finansia Syrus Securities requests customers to specify a type of trading account (Asean or global trade) or if they want to open both. Thanachart Securities provides the Asean Trading Link under a global trade account and customers just tell the broker the date they want to transfer money via the Asean or global system.
Ms Siriporn and Mr Kosin suggest the global trading channel is good for customers who usually trade Singaporean stocks. If they trade stocks on Bursa Malaysia, they are advised to use the Asean Trading Link.
With some brokers, customers need to transfer money to an account, then convert to destination currencies with some charges (see table).
Some brokers allow customers to put money into other currencies, while others say customers should just change money into baht with no transfer charge since they have credit lines between brokerages.
The different times and trading hours have some effect. Check with your broker to make sure your money will be ready for trade on the date you want.
Boonporn Boriboonsongsilp, the chief executive for retail business of Maybank Kim Eng, said trading offshore involves not only trading commissions but also additional expenses such as a currency conversion fee, foreign fee, custodian fee and tax issue.
"You should have cold money to invest long term, as total fees for Asean trade are 0.4% to 0.5% or 4,000 baht for 1 million baht worth of trade, twice the local trading commission of only 0.25% or 2,500 baht per 1 million baht trade. If you trade stocks in Western countries, total fee charges may be 1% to 1.5%," she said.
Trading on the SGX carries a lower trade commission than in Thailand but has a clearing fee of 0.04% and a trading fee of 0.0075%.
Trading commissions on Bursa Malaysia include a contact stamp fee of 0.1% and a foreign fee of 0.03%.
Almost all brokers have a minimum fee of S$20-50 (500 to 1,300 baht) per day for trading in Singapore and 50-150 ringgit (500 to 1,500 baht) per day for trading in Malaysia.
If the trading amount is higher than the minimum, then the trading fee will be quoted as a percentage of total trading volume. Some brokers have no minimum fee but will charge a handling fee instead.
UOB Kay Hian has a promotion for a trading fee at 0.27% excluding other fees and value-added tax until mid-January. After that, trading commission will be on a sliding scale, varying according to the trading amount from 0.27% to 0.4%.
Understanding market differences
Mr Kosin from Finansia Syrus said customers choosing brokers should consider the experience of staff and the different markets. The trading range in Singapore and Malaysia normally does not swing during the day as in Thailand. The price normally moves at the start or end of the session.
Suthep Rungsiam, the managing director of KGI Securities, said Singapore is an advanced market, Malaysia is an advanced emerging market, and major players are institutional investors. Both markets are less volatile than Thailand's.
The Thai equity market is more attractive in terms of dividend yield, earnings growth and price. KGI does not expect much outbound trade but will focus on inbound trade instead.
"The Asean Trading Link will be more attractive for Thais if the second phase starts. At that time, local retailers will be able to trade in Indonesia, the Philippines and both markets in Vietnam. These are emerging markets with high growth, and prices are more volatile," said Mr Suthep.
Another six brokers _ Asia Plus Securities, DBS Vickers Securities, Kasikorn Securities, Capital Nomura Securities, OSK188 and Tisco Securities _ plan to plug into the Asean Trading Link by mid-January.
About the author
Writer: Darana Chudasri & Nuntawan Polkuamdee