Stock Market

🔰 What Are Stocks? — The Basics You Need to Know

When a company wants to raise capital to expand its business, instead of borrowing from a bank (which requires paying interest), the company can "sell shares" to investors through an IPO (Initial Public Offering) — the first time shares are offered to the public. After the IPO, shares trade on the Secondary Market or stock exchange, where investors buy and sell from each other, with prices moving based on supply and demand.

Thai Stocks — The Stock Exchange of Thailand (SET)

The Stock Exchange of Thailand (SET) was established in 1975 and currently has over 700 listed securities, divided into 2 main boards:

• SET (Main Board) — For large companies with paid-up capital ≥ 300 million THB and net profit ≥ 30 million THB
• mai (Market for Alternative Investment) — For SMEs and Startups with more relaxed requirements

Key SET Indices:

• SET Index — Covers all stocks on SET (excluding suspended stocks)
• SET50 — The 50 largest stocks by Market Cap and liquidity
• SET100 — The next 100 largest stocks
• SETHD — Stocks with a high and consistent dividend payment history
• sSET — Stocks outside SET100 (Small Cap)

Advantages of Thai Stocks: Low fees (0.15-0.25%), dividends subject to 10% withholding tax with tax credit available, information available in Thai, TFEX available for Futures/Options, no foreign exchange risk.

SET Industry Sectors: Energy (PTT, PTTEP), Banking (SCB, KBANK, BBL), Retail (CPALL, HMPRO), Tourism (AOT, CENTEL), Property (AP, LH), Transportation (BEM, BTS), Technology (ADVANC, INTUCH).

🇺🇸 US Stocks — The World's Largest Market

The US stock market has a total value of over $50 trillion (~55% of the global stock market). It has the highest liquidity and is home to the world's leading technology companies.

Major US Exchanges:

• NYSE (New York Stock Exchange) — The oldest exchange, founded in 1792. Blue Chip stocks like Coca-Cola, JPMorgan, Walmart
• NASDAQ — Electronic exchange, tech-focused: Apple, Microsoft, Google, NVIDIA, Amazon, Meta, Tesla

Key Indices:

• S&P 500 — The 500 largest US companies. The primary benchmark index for investors worldwide, with a long-term average return of ~10% per year
• Dow Jones Industrial Average (DJIA) — An index of 30 leading industrial companies, the oldest index
• NASDAQ Composite — All stocks on NASDAQ, heavily tech-weighted
• Russell 2000 — 2,000 Small Cap stocks, used to gauge the domestic economy

The Magnificent Seven: AAPL, MSFT, GOOGL, AMZN, NVDA, META, TSLA — 7 tech stocks driving the US market, accounting for ~30% of the S&P 500

How to buy US stocks from Thailand: Through Thai brokers offering foreign stock services (e.g., KGI, Phillip, DBS Vickers) or by opening an account directly with a foreign broker (Interactive Brokers, Charles Schwab).

🇨🇳 Chinese Stocks — The Sleeping Dragon of Asia

China is the world's 2nd largest economy with a GDP of ~$18 trillion. Chinese stocks are unique, with both mainland (A-Share) and offshore (H-Share/ADR) markets.

Major Chinese Markets:

• Shanghai Stock Exchange (SSE) — A-Share stocks traded in Yuan (CNY), difficult for foreign investors to access
• Shenzhen Stock Exchange (SZSE) — Tech and Startup focused, has the ChiNext Board
• Hong Kong Stock Exchange (HKEX) — H-Shares of Chinese companies listed in Hong Kong, easily accessible to foreign investors

Key Indices:

• Hang Seng Index (HSI) — The 82 largest stocks on the Hong Kong market
• CSI 300 — The 300 largest stocks on the Shanghai and Shenzhen markets
• Hang Seng Tech Index — 30 major Chinese tech stocks (Alibaba, Tencent, Meituan, JD.com, Baidu)

⚠️ Specific Risks: Chinese government policy changes can severely impact stocks (Regulatory Crackdown), geopolitical tensions (Taiwan, US), Delisting Risk for ADRs, and lack of transparency in financial statements.

🇯🇵 Japanese Stocks — The World's 3rd Largest Economy

The Japanese stock market (Tokyo Stock Exchange — TSE) has a market value of ~$6 trillion.

• Nikkei 225 — An index of 225 leading Japanese companies (Toyota, Sony, Honda, Nintendo, SoftBank)
• TOPIX — An index covering all stocks in the TSE First Section
• Strengths: High-quality companies, good dividend stocks, a weak yen benefits exports, and Corporate Governance reforms following Abenomics

🇪🇺 European Stocks

• DAX (Germany) — 40 large-cap stocks on the Frankfurt Stock Exchange (SAP, Siemens, Mercedes-Benz, Allianz)
• CAC 40 (France) — 40 large-cap stocks on the Paris exchange (LVMH, L'Oréal, TotalEnergies, Sanofi)
• FTSE 100 (UK) — 100 large-cap stocks on the London exchange (HSBC, BP, Unilever, AstraZeneca)
• STOXX Europe 600 — An index of 600 companies across Europe

🇮🇳 Indian Stocks — The Rising Star of Asia

• Nifty 50 — Index of the 50 largest stocks on the NSE (Reliance, TCS, HDFC Bank, Infosys)
• Sensex (BSE) — Index of the 30 largest stocks on the BSE
• Strengths: The fastest-growing economy among major nations (GDP Growth 6-7% per year), the world's largest young population, and the "Make in India" policy boosting investment
• Risks: Political instability, Rupee volatility, complex regulations, and Foreign Investment Limits

Choosing Dividend Stocks

Dividend stocks are shares of companies that regularly distribute profits back to shareholders, typically paying 1-2 times per year. This group is suitable for investors seeking Passive Income or a steady cash flow.

Criteria for selecting quality dividend stocks:

• Dividend Yield — Dividend per share ÷ Stock price. Normally 2-6%; if above 8%, it may be a trap
• Payout Ratio — The proportion of profit paid as dividends. Should not exceed 80%; paying too much means no money left for reinvestment
• Dividend payment history — Consistent payments for ≥ 5 years with an upward trend
• Free Cash Flow — Must have sufficient cash flow to pay dividends, not borrowing to pay them
• DPS (Dividend Per Share) — Dividend per share; observe the growth trend

Examples of notable dividend stocks on SET: PTT (Yield 5-6%), SCB (4-5%), ADVANC (3-4%), AOT (1-2% but good Capital Gain), BBL (3-4%), INTUCH (3-5%), TISCO (5-7%)

📌 Tax Benefits: Dividends from Thai stocks are subject to 10% withholding tax, and you can claim a dividend tax credit, meaning low-income earners may receive a tax refund.

Financial Statement Analysis — An Investor's Foundation

Financial statements are a report on a company's financial health. There are 3 main statements investors must learn to read:

• 1. Income Statement — Shows revenue, costs, and profit over a period
  → Revenue → COGS → Gross Profit → Operating Expenses → EBIT → Interest Expense → Tax → Net Profit
• 2. Balance Sheet — A snapshot of financial position at a specific point in time
  → Accounting equation: Assets = Liabilities + Shareholders' Equity
  → Current Assets (Cash, Accounts Receivable, Inventory) vs Non-current Assets (Land, Buildings, Machinery)
• 3. Cash Flow Statement — Actual cash in and out, the most important because "Cash is King"
  → Operating CF — should be positive
  → Investing CF — negative = expanding the business
  → Financing CF — borrowing / paying dividends / raising capital

🔢 Financial Ratios

Financial ratios help you compare companies of different sizes:

🎯 Value vs Growth Investing

Two fundamentally different investment approaches:

GARP (Growth at a Reasonable Price): A hybrid of Value and Growth — buying growth stocks but not at excessive valuations. Look at the PEG Ratio (P/E ÷ Growth Rate); if PEG < 1 = reasonable.