Is it a good idea to invest in international markets?

A column by Buffettcode


  • Most large technology indexes exist outside the Thai stock market and include companies such as Facebook, Google, Amazon, and Alibaba. Currently, these indexes are growing fast because they are seen as part of a better future for all people on the planet.
  • Since these companies are based in many different countries outside Thailand, it is more difficult to evaluate them as investments than it is to evaluate companies within our own borders and culture.

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:

  1. Most large technology indexes exist outside the Thai stock market and include companies such as Facebook, Google, Amazon, and Alibaba. Currently, these indexes are growing fast because they are seen as part of a better future for all people on the planet. People who are familiar with these products and services are beginning see which companies have already cemented their place in the market. For example, Facebook has been extremely popular around the world for an entire decade without interruption or serious competition, and no other service has managed to challenge Google Maps for the world's daily transportation needs during that same time.

  2. All investors desire consistent growth in their investments, and many international indexes have proven long-term growth. Due to these companies' success within their countries, they have naturally expanded onto the world market. Some well-known examples of this are Apple, Starbucks, Louis Vuitton, Moët Hennessy and Amore Pacific, the owner of the famous Korean brands Etude and Innisfree. We have watched these companies develop into leading players in the worldwide market place, while many promising Thai brands failed to make it to the international stage.

  3. Another important thing for big investors is liquidity. There are not many companies in Thailand with multi-million baht market capitalizations, and so choices for big investors are limited to the oil, banking or airport sectors.

    The most popular index in Thailand is PTT, which has a market cap of 1.4 billion baht, but with a slow growth rate due to its large size. In international markets, however, there are many indexes boasting market caps in the billions of baht, with growth rates of 20%.

    Within these international indexes, there are many large companies like Apple (AAPL) with a 31 billion baht market cap; Walmart (WMT) at 8 billion; Inditex (ITX), the owner of Zara at 2.7 billion and Uniqlo with a 1.5 billion baht market cap.

    Not only do large companies have good liquidity flow, but they are also difficult to manipulate. Just how difficult? Try to imagine how much spare change you would need to sway a 31 billion baht behemoth like Apple!

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.