XM is the eToro of ASEAN

The past couple of weeks I’ve been in Vietnam, Cambodia, and Thailand. I appreciate this is a slightly strange and annoying way to start this newsletter. Regardless, usually when I go away, I front load a few articles before I head off, so that I can just hit ‘publish’ on Monday then get back to enjoying life.

This time around I half did that but this industry is so ubiquitous that I ended up seeing or experiencing so much stuff that was related to the sector, without even trying, that I thought it would be fun to write about it.

Much of this probably won’t be ‘news’ to readers. However, it’s one thing to be sitting in London or Cyprus and know something in theory, versus actually seeing it first hand. It is hard not to imagine that this is as true of other markets around the world, whether it be parts of Africa or LATAM, as it is in the ASEAN region. So here is your intrepid CFD reporter coming live from central Bangkok.

XM is everywhere

Regular readers are likely to have a similar experience to me when browsing through the internet. That is, your cookies are now so clogged with ‘trading’ data that every single targeted ad you get is from a CFD broker.

In the UK, at least at the moment, the main ones I see are either Capital.com or eToro. This does change over time though. For instance, one annoying Plus500 advert that ran on YouTube about three years ago (‘Tradings not for everybody…’) is indelibly seared into my brain.

The equivalent for this in every country I have been to on this trip is XM. Without exaggeration, I would say that over 80% of online ads, including on videos, have been from them. Annoyingly I didn’t bother to screenshot these early on but you can see an example of what things look like in Thailand below – note the big shot 30 bucks deposit minimum.

XM is a company that I see zero adverts for in the UK and have had little engagement with. But whenever you have a beer with someone in the CFD world that’s more focused on emerging markets, it will get to a certain point in the night where they start talking whimsically about how much volume XM is doing in some random country in Asia or Africa. Apparently this is part of the way in which they do it. 

The other company that was giving me a lot of banner ads was Exness, particularly in Vietnam. In fact, I’d say the XM / Exness online ad split in Vietnam was about 50/50, whereas it was >90% XM in Cambodia and Thailand.

Perhaps unsurprisingly then, you can see that the no.1 country for traffic to XM’s website is Thailand…

]Exness is a bit weird because they have several URLs. Thailand holds the top spot for traffic on their ‘.com’ URL. But traffic for their ‘.Asia’ URL, which has >3m visits per month according to SimilarWeb, all comes from Vietnam.

Smartphones are a bigger deal than I gave them credit for 

One of the features of any conference or event that I have been to since starting work has been lots of people talking about ‘DIGITISATION’ and speakers will ramble on about how javascript is going to mean farmers in Lesotho can lose their UNBANKED status (or something similar).

Probably because of how annoying this is, I didn’t really appreciate how impactful and widespread smartphone adoption has been. As an example, about a decade ago I went to one country in Africa. I didn’t have a smartphone at that point and for most people there it seemed like a massive deal if someone even had one of those old Nokias that just does calls and texts.

Africa is not Asia and clearly there are going to be massive differences between the two. Nonetheless, looking at smartphone adoption rates in ASEAN and African countries, the level of growth has actually been relatively similar, albeit with Asean starting to adopt about 5 years earlier.

For instance, in Vietnam a decade ago only about 30% of the population had a smartphone. Today it’s close to 100%. These are also not crummy devices. Anecdotal though I appreciate this may be, almost every time I rode on the back of a moped or in a taxi, the guy driving had a better phone than I did. One moped driver was even using an Android that was superior to mine for GPS then whipped out a new iPhone to message his friend when we stopped at a traffic light.

This has opened up a huge range of services that simply couldn’t have existed previously. For instance, digital banking and payments seemed in many instances more developed than in ‘developed’ countries like the UK or other parts of Europe.

More importantly for readers of this publication, this has undoubtedly been the key driver of bringing in clients in emerging markets. A smartphone effectively acts as a miniature computer and, because many of these people likely didn’t have computers before, they were impossible to onboard as a client.

To top that off, the phone itself means people can access the other services, like payments and banking, that they need to put money into a trading account. Again, this is unlikely to be surprising to lots of readers but actually seeing things in real life hits home how brokers are able to make so much money in these countries.

Commission-free trading is now in Thailand

Driving through Bangkok’s horrific traffic for the past few days, you have been able to see two types of ads. One has been for the elections, with different candidates plastering themselves all over the city.

The other has been for a trading app called ‘Liberator’. I had never heard of this before but it is everywhere. You can see a hastily taken, back-of-a-Grab taxi picture of one such billboard below:

And here is part of the app’s branding when you download it:

As the branding and ‘Social Investment Platform’ text implies, this seems to be a Robinhood or eToro-style commission-free trading app. I won’t bother translating the rest of the text as I’m sure, like me, you have excellent Thai skills and can read it yourself.

If you visit the company’s website, you’ll find that it is mainly offering commission-free stock trading. Apparently the company launched in January and its main selling point seems to be providing low-cost access to Thai-listed stocks. 

However, the website also notes that they plan on adding social trading features, as well as margin trading. Does that mean XM is going to have some competition in Thailand down the line? 

Well, despite all the billboards, Liberator isn’t even in the top 50 finance apps on either Android or Apple in Thailand. In fact, a CFD broker based in Vanuatu that I’ve never heard of is ahead of them in the rankings too. Guess they need more billboards.

Strange tales from Cambodia

Cambodia is like a country from Cowboy Bebop, with red dust everywhere and people driving mopeds in jungle hats. 

One of the more interesting stories I heard on the part of the trip there was from someone in Phnom Penh, the country’s capital. I didn’t actually find out what this person’s name was because he only referred to himself by a nickname. I don’t want to ‘out’ this person, which is unfortunate because the article would be much funnier if I could say the name, but to simplify things, we’ll call him ‘The Little Chef’.

The Little Chef and I were speaking and he started talking about what he did prior to setting up his business – note he revealed the following of his own volition, I didn’t even say anything about crypto or trading for him to reveal this. 

He spoke about how in part of northern Cambodia, Chinese ‘businessmen’ were making lots of money running ‘call centres’. Allegedly these call centres were used for either crypto or gambling. 

At a certain point, the Chinese government got annoyed that this was happening and made the Cambodian authorities shut it all down. However, in their place, The Little Chef said that other call centres were set up, some of which were run by Chinese but others by different foreigners.

People working there would be tasked with calling up people in Europe and then gathering bits of information about them. The Little Chef apparently thought this was all legit but then realised the information was being passed to ‘trading companies’, who would then act aggressively in getting money from those people. 

This all sounded very familiar to me but, alas, The Little Chef realised what was going on and felt bad, so he left before he could gather further information. Are people in Cambodian call centres gathering leads for brokers in the CFD sector? I don’t know but there is definitely a lot of dodgy dealing going on.

Apparently call centres in Cambodia are being used to operate a type of scam called ‘pig butchering’. This is where someone pretends to be your love interest, gets you to ‘invest’ in stuff and, once you have no more money to give, they disappear and you never hear from them again.

Why may this be of interest to readers? Allegedly it was a pig butchering scam that got MetaTrader banned from the app store. People from all over ASEAN countries are being recruited to work for these companies and then get trapped there. This interview gives an interesting first hand account of what it’s like.

The power of football (and television) 

One of the things you always hear about is how football has a huge global audience and there are 1bn people in China tuning in to watch Brentford every week. Something like that anyway.

Whatever the case, I was once again struck by how frequently, without trying at all, branding for firms in the CFD space would pop up. 

One evening in Vietnam I was at a bar on a very busy road that had huge TV screens all over the place and there, creeping up on me, were ThinkMarkets banners all over the side of the pitch. Then you realise that Vietnam is also one of the company’s largest markets and you see how meaningful that global reach actually is.

Another time I stopped to get coffee by the side of the road in the middle of nowhere in Cambodia. At the stand, there were two university students, one of whom was studying and the other was streaming a West Ham match on his laptop. Again, you had the Scope Markets branding on the sleeve and, because it was a European fixture, Swissquote branding on the side of the pitch.

Also in Cambodia, I went to a sports bar-type place that was popular with Australians and they had a peculiar game playing (Aussie Rules?) and CMC Markets was sponsoring one of the teams. 

The final ad that I got hit with, which was surprising, was on a TV playing at breakfast at my hotel in Bangkok. It was a business channel and out of nowhere an ad for Interactive Brokers prime service started playing. There is no escape!