Thai Gold Investment
Thai investors have a preference for a wide range of asset classes and they tend to be attracted to offshore investments. When it comes to investment decisions, most depend on family and friends for investment advice but there are also those who look to their private bankers and online research as sources of advice. They are driven by their high-return expectations, security and stability, and desire for financial freedom through passive income.
Attitudes and Behaviors of Thai Investors
1. Preference for a wide range of asset classes
- Historically, the majority of Thai consumers have been keeping and investing their money in simple financial products such as insurance and deposits. However, this has slowly changed in recent years as investors turned to mutual funds while shifting away from deposits. This started after the peak deposit competition phase of Thailand's local banks in 2010-2014. This shift is seen in "the rising ratio of fund unit holders to population and to bank accounts" as well as in the 59% increase of mutual fund assets from 2013 to 2017."
- Bangkok Post also reports that "retail investors' behavior has changed from the past because they have been exposed to investment strategies designed for better returns" which "causes investors to have a long investment period either in equities or mutual funds investing in equities."
- In these mutual funds assets, more than half (58%) are invested in fixed income or yield products while only 21% are invested in equity funds.
- Thailand investors have been "showing greater preferences for a wide range of asset classes to achieve outperformance in a still low interest rate environment." Also, income-oriented strategies including income-oriented solutions that reduce portfolio volatility have dominated investors' portfolios in recent years.
- Aside from that, Thais have also started investing more "in derivatives listed on the Thailand Futures Exchange (TFEX), reflected in higher trading value and rising retail investor trading on the TFEX."
- Those who invest in stocks have attitudes that are influenced by several factors. A 2019 case study on individual Thai stock investors reveals that "the convenience in gaining information, investment cost, the knowledge, the understanding of the investment have a crucial impact on attitude towards stock trading of individual Thai investors in different groups."
2. Attraction to offshore investments
- A 2019 study conducted by SCB Julius Baer as reported in their 2019 Thailand Wealth Report reveals that 40% of Thailand's high net-worth individuals are presently holding at least one offshore investment. From these offshore investments, fixed income and equities are revealed to be the "most widely held in investment portfolios (80%) followed by funds (75%) and direct real estate (51%). "
- The survey also reveals that 52% of Thai investors initially held offshore investments because the investment was seen as a unique opportunity. But this motivation shifted to looking for an investment return that matches their future return expectations.
- Among the offshore investment firms, "Asian firms were well-featured especially Singapore firms." This shows that Singapore is the most popular offshore investment destination for Thai investors.
- Bangkok Post reports that Thai investors now have more available options for offshore investments which can either be through direct investment or through local brokerage firms.
3. Family and friends are their top advisors
- Since Thailand is a closely-knit society, it is not a surprise that Thai investors' top advisors "when making investment decisions are family and friends (43%) followed by their private banker (27%)."
- Thai investors also demonstrate high digital savviness as 13% of investors in different age groups reveal that online research is their top source for investment advice.
- This aligns with studies that show high digital usage in Thailand, revealing that "there are 92 million mobile subscribers (133% penetration) with 55 million active mobile internet users." Aside from that, "Thailand is also the highest ranked globally for internet banking services (74% penetration)."
- A 2020 study on Thai retail stock investors also reveals that investors who have less than five years of investment experience rely more on themselves and their family members when it comes to investment decisions. The study also shows that for retail investors "overall investment factors on the social and economic environment and industry are at a high level, while fundamental stock analysis, technical stock analysis, and individual stock are at a moderate level."
Drivers or Motivators Towards Investments
1. High-return expectations
- Thai investors are driven by their high-return expectations. The 2019 Julius Baer survey reveals that only 27% of Thai investors are "satisfied with their current returns matching their expectation." This might have been influenced by the "underperformance of Thai equities to global markets over the past few years."
- Thai investors are also motivated by wealth creation rather than wealth preservation (56% vs 41%). Their investments are directly related and influenced by their risk appetite. The age group that is primarily driven by wealth creation is the Thai millennial entrepreneurs whose median age is 35.
- A 2020 study on Thai real estate investors also shows that "the earned yields for any investment type are not as high as most investors expect."
- Thai investors who invest in bitcoin are also driven by the investment's expected return or the revenue that they will get. Those investors who are mature or older (40 years old and above) are driven by the desire to diversify their portfolio while Thai bitcoin investors who are younger than 23 years old tend to invest for fun and entertainment.
2. Stability and security
- Offshore investments have been attractive to Thai investors "due to political stability, property rights and offerings of high-quality, reliable financial services" as well as "other idiosyncratic aspects like tax neutrality and personal preferences."
- Proximity is also seen to be "a key factor for investors in determining locations for offshore financial services."
- Mature Thai investors whose median age is 51 are driven by stability and security when choosing an offshore investment. They also see offshore investment as a means for portfolio diversification. From the 2019 Julius Baer survey, mature investors constitute 59% of the total sample.
3. Financial freedom through passive income
- A 2020 study on Thai real estate investors reveals that investors believe that financial freedom is achieved through passive income. Real estate investors are driven by the desire to establish their passive streams of income. This is why direct real estate investment remains to be a popular passive income investment.