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Original Issue

Tee Time for Traders

A Bangkok stockbroker has capitalized on the golf boom in Thailand by speculating in country club memberships

On this particular day, the big board is brimming with buy and sell orders. Phones are ringing steadily as the staff wheels and deals. No, this isn't some stock exchange. It's the Golf Course Membership Exchange Centre Co. Ltd. of Thailand.

Located on the second floor of a Bangkok shopping mall, the exchange handles the multimillion-dollar business of brokering Thai golf club memberships. In the past few years there has been an explosion in Thailand of new golf courses. And there has been a rising tide of golfers eager to join these clubs. The rapid increase in both supply and demand led to speculation in memberships, and this in turn led to establishment of the exchange.

Kitti Komthongsatid, 42, founded the exchange in August 1989. At the time, he was managing director of Metropolitan Investment Trust, a securities brokerage, and knew nothing about golf. "Some of my customers were pressing me to sell their golf club memberships," he recalls. "They needed more money to play the stock market." Kitti ran a classified ad in two newspapers and was surprised by the enthusiastic response. "I had many calls wanting to buy and wanting to sell," he says. Relying on his experience as a broker, he established his exchange center at the mall, modeling it after the Stock Exchange of Thailand. He hired people to handle the phones and hung a big board, listing buy and sell prices for memberships at the clubs, on the wall. His timing was impeccable. In 1989 there were 400,000 golfers in Thailand, according to an estimate by the Bangkok Post, but only seven private golf clubs. Today, there are 14 clubs and, says the Post, more than a million golfers—and in the next two years more than 80 new private courses are expected to be added.

Kitti acts as agent both for individuals buying and selling memberships and for courses trying to enlist members; new courses usually begin marketing their memberships even before ground is broken. Why, since clubs can sell directly to the public, do they go through Kitti? Because he knows where the deep-pockets buyers are. More than half of Kitti's customers are Japanese working in Thailand. "They are afraid to invest in a course that's not finished," says Kitti. "They don't know the reputation of the Thai people involved in it." Kitti investigates the shareholders, management and location of each course before making recommendations to would-be members.

By contrast with the Japanese, Kitti's Thai clients have fewer reservations about buying into courses still under construction. The speculators among them buy memberships in clubs at a pre-opening discount. Then, after a course opens, they resell these memberships at tremendous markups to the once skittish Japanese. The profit from such speculation can be enormous. Consider: In 1987, according to the Post, Navathanee and Pine Hurst, two of Thailand's most prestigious clubs, were selling 30-year memberships for $12,000 and $6,000, respectively. Today those memberships are being offered on the exchange at $72,000 and $36,000.

Kitti says membership speculation is the reason that, even though golf is booming, private courses are, at times, relatively empty. Club membership rolls contain many investors who wouldn't know a putter from a pot bunker. Simon Edmonds, a 29-year-old English expatriate and Bangkok-based broker who also deals in golf memberships, says, "Some clients spread their memberships out like a stock portfolio. I have one who buys 30 memberships at the same club."

Kitti and Edmonds are bullish on the future of the golf market. "Any course within a 60-kilometer radius of Bangkok is a good investment," says Edmonds. Kitti says, "Even when all the newest courses are complete, there will be more demand than supply. The game's increasing popularity and the influx of foreigners to Thailand will see to that."

Recently, however, the membership market has softened somewhat. Over the past several weeks, speculation in club memberships dropped after certain developers were accused of encroaching on public lands, and some 20 golf projects were halted. Furthermore, as even Edmonds admits, "Land values have shot up in the past two or three years, and costs may be so high that a club currently in the planning stage may never come on-line."

Kitti is sanguine. He points out that during the Thai military coup last winter, trading remained brisk. Kitti believes any market that can weather a coup should be able to withstand price fluctuations and the embarrassment of an occasional scandal.



Kitti mixes play with work at the Membership Exchange.

Robert Horn, a free-lance writer, lives in New York City but travels frequently in Asia.