Is it a good idea to invest in international markets?
A column by Buffettcode
Over the past decade, more and more Thai people have begun to invest in businesses in Vietnam, China, Japan, Europe, and America. One reason for this is that the fees charged to make trades in these markets have lowered substantially. Also, it is easier these days to find information about the products and services of these companies, which Thai people are now using more than ever before.
In our daily routine, I am sure that we are now using more products from international companies than from Thai companies. We wake up and reach for our iPhones to connect with Facebook, bathe under a Kohler showerhead, rub our skin with Nivea lotion, put on Nike shoes, drive a Toyota to Starbucks and start work on a Dell computer using Microsoft Windows connected to the Google cloud. These are only some examples, from home to office, that illustrates our intimate connection to foreign brands, and all this before lunchtime!
It's no surprise then that many Thai investors are willing to take risks in international stock markets in order to be a part of the things that are already intimately familiar to them in their daily life.
In addition to making a deeper connection to familiar products and services, there are other benefits that come from investing in international markets, such as:
However, there is some risk involved when trading in international markets. For instance, it may be easy to find some information about the overseas companies you want to invest in, but that information will not be as deep as the information you can find about Thai companies, because the management and CEO of international companies will be very hard to contact directly. Companies listed on the Thai stock market will be easier to communicate with, of course.
You can call and talk directly to the CEO of a small Thai company, but talking to the CEO of an international company must be done at the annual meeting unless you happen to be a very large investor or analyst from a big investment bank.
Many international stock markets include companies based in more than one country, so to evaluate and understand companies from these various countries will not be easy. The Thai stock market, however, only includes business based in Thailand. We, as Thai people, can easily understand our own country's businesses and so we feel more secure when investing in our own stock market. One reason why few Thai people invest in international markets is that comfort and security are the most important factors to consider when investing money.
In the end, do you really want to send your money to markets in other countries? This is a question you must answer for yourself. You are always going to feel a bit insecure about it, but that alone may not be enough reason to give up the desire to be a part of the global brands that play such an intimate role in all our lives.