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Published on September 17, 2007

For many savvy investors like Sondej, whose investments are as varied as stocks in US slimming centres to properties in Malaysia to assorted funds, the recent easing of the exchange-control regulations is a blessing. Whether it is a direct or indirect investment, the more capital is allowed to flow abroad the lighter the brunt individual investors have to bear in hard times. It is mere diversification, but slightly more adventurous.

Yet caveat emptor ("buyer beware"): as with any form of local investment, investors must pay close attention to the return and volatility rates too, said Kasikorn Asset Manage-ment executive vice chairwoman Wiwan Tharahirunchote.

For instance, over the year, according to data from Bloomberg, the average return per year for Thai equity is 16.17 per cent, but with a volatility rate of 26.23 per cent. Compare this to  emerging markets worldwide - equities at a 37.47-per-cent return  and a volatility rate of 17.9 per cent - and one can clearly see that Thailand is underperforming and risky by comparison with the rest of the world.

Emerging-market equities in general are good investments. Sectors such as oil and copper, may yield impressively now but are easily influenced by geopolitics, said Wiwan.

It is vital for investors to closely monitor economic and political developments and currency fluctuation. "I would suggest that investors take a top-down approach instead of picking a specific stock, unless it is a global brand like Nokia or Toyota," said Wiwan.

As a result of the sub-prime debacle, the US real-estate investment-trust market has gone under, with negative growth of 3.45 per cent at a volatility rate of 21.24 per cent, but if one were to stretch the time frame out to 10 years the return could be around 15 per cent, with volatility lower than for emerging-market equities.

Yet do not panic when the market seems to be swinging up and down senselessly, said Bancha Serngadichaivit, Bualuang Asset Management's assistant vice president for fund management. Investment must also come with discipline - especially for individuals. One must learn to dig in for a longer term.

Bancha suggested that those interested in local equities start modestly, say, at 10 per cent of their total investment portfolio, and grow accordingly. He personally holds half of his equities abroad through mutual funds.

The same rules for investing here apply for doing so abroad. It is about making the right choices - Somdej and Bancha look to healthcare for growth - having the right timing - Somdej would not hesitate to move his Bt100 million in US Treasury funds elsewhere - and diversifying asset allocation.

One last caveat: the baht rose 5.38 per cent against the greenback from January to July, said Songpol Chevapanyaroj, head of Kasikornbank's capital-markets division. This means  Songpol's foreign investment yield of 10 per cent fell to 2 or 3 per cent when converted to baht.

Ki Nan Tsui

The Nation