Discover SGX: Unlocking Thailand’s Potential with Singapore Depository Receipts

October 25, 2023

At the beginning of this year, while I was tempted to look into Thailand’s stocks, I held back from diving into this market amid the prevailing political uncertainties.

However, in recent times, this allure has significantly escalated, particularly with the establishment of political stability in Thailand.

The formation of a new Thai government on August 23, 2023, led by Prime Minister Srettha Thavisin from the Pheu Thai Party, signalled the end of a turbulent political phase and the commencement of a new promising era for the country.

This positive political transition underlines the emerging potential of the Thai market, attracting the gaze of investors worldwide.

With a new investment product launched by the Singapore Exchange in May this year, investors can now invest in some of Thailand’s largest companies via the Singapore Depository Receipt (SDR).

This marks a significant step in connecting the financial markets of Singapore and Thailand.

Currently, investors can easily invest in some of Thailand’s largest companies, such as Airports of Thailand (BK: AOT), CP All (BK: CPALL), and PTT Exploration & Production (BK: PTTEP), all of which are part of the important SET50 Index.

What’s Special About SDRs?

SDRs allow you to own a part of Thai companies while trading on the Singapore Exchange (SGX).

This means you can invest in big Thai companies without having to navigate foreign investment processes.

They are designed for everyday investors, keeping risks and returns balanced.

Why Invest Using SDRs?

  1. Simple and Convenient: SDRs make investing in overseas companies as easy as buying local stocks. They trade in Singapore dollars during Singapore trading hours.
  2. Cost-Effective: With SDRs, you avoid extra overseas trading fees, currency exchange fees, or management fees.
  3. Secure and Transparent: Information on SDRs is readily available, and they are securely held with CDP, Singapore’s central depository.
  4. Flexible: You can choose to convert your SDRs to the actual stocks of the Thai companies if you want, allowing more options for your investment.

Entitlements and Distributions

Investing in SDRs also entitles you to dividends and other benefits from Thai companies, paid directly to your Singapore bank account.

However, note that these benefits may be paid a bit later compared to directly investing in Thai companies.

Understanding the Risks

While SDRs open up new and exciting investment opportunities, it’s important to know there are risks.

The value of SDRs can change due to market conditions, currency fluctuations, and differences in international trading laws.

Always make sure to get informed before investing.

Seizing opportunities in the Land of Smiles

In light of Thailand’s new era of political stability and economic promise, SDRs serve as a pivotal and strategic gateway for investors seeking to tap into the Thai market.

SDRs offer a unique blend of simplicity, flexibility, and security, enabling investments in prominent Thai companies while mitigating the challenges of international trading.

However, the dynamism of the market necessitates informed decisions, with an understanding that value can fluctuate due to various factors.

Ultimately, SDRs present a golden opportunity to explore the vibrant prospects of the Thai market, combining the ease of local trading with the excitement of international investment, symbolising a significant step towards global financial integration.

So, let’s seize this moment, navigate the vibrant Thai market with prudence, and unlock the potential that the Land of Smiles holds for the global investment community.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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