Emerging Markets – Thailand

Author bio: Steve is the owner of the site Money Infant and a recent expatriate living in Thailand in semi-retirement. He writes on a variety of finance and investment related subjects as well as focusing on life in Thailand and Thailand investment opportunities. Once you are done here head over there and say hi. Tell him InvestorzBlog sent you!

Investing wisely is all about diversification to protect your assets. You know it isn’t possible to time any market, so you need a way to ensure that when one market tanks another is rising to help offset any losses. One popular way to diversify outside your home country is through the stocks in emerging markets. These are the underdeveloped countries where growth can still be explosive and returns on stocks can be equally heady.

One of my recent favorite emerging markets plays is Thailand. As a hub of business activity in Asia it has attracted the attention of manufacturers from Japan, Korea and China as well as investment dollars from around the world. Despite the ongoing political problems the country has it continues to grow at a rapid pace and it’s stock market, the Stock Exchange of Thailand (SET) continues to rise as well. In addition, Thailand companies focus heavily on dividend payments and it isn’t unusual to find dividend rates here between 5% and 10%.

While investing in individual Thai stocks can deliver outstanding returns, doing so is not easy. You need both a bank account and brokerage account in Thailand and of course analyzing these foreign stocks can often be a headache. An easier approach to gaining exposure to the Thai markets is through an ETF or Exchange Traded Fund. These are baskets of stocks that seek to mirror the returns of a particular index and with their instant diversification across industries or countries, low fees and ease of exposure they can be the perfect choice to diversify your portfolio globally.

In the case of Thailand the only country specific ETF I was able to locate is the iShares MSCI Thailand Investable Market Index Fund (Symbol: THD). Although it is the only fund I was able to locate, it is a pretty good one for all that. It boasts fees that are lower than the average for emerging markets ETF’s (0.% vs 0.65%), a broad exposure to the largest capitalization companies in Thailand and a broad diversification across many market sectors.

The fund has only been in existance since 2008 so historical data is slim, but the fund has an average annual return of 40.13% and -4.23% over the past 3 year and 1 year periods respectively. The loss in 2011 can be attributed to the extreme flooding across much of Thailand from September through November. Considering it is the worst flooding the country has seen in 60 years it isn’t likely to be repeate anytime soon. Current YTD returns for 2012 as of the end of February have reversed the downtrend and are 20.47%.

As a resident expatriate in Thailand I can tell you that conditions here have never been better. Asia hasn’t suffered from the banking and housing crisis in the West and growth in Thailand is a stunning at 7.81% in 2010 and was on pace to grow at over 5% in 2011 prior to the severe flooding which caused a 10.8% contraction in the 4th quarter of 2011. Conversely, growth has heated back up not only on the export side, but also domestically as the country rebuilds from the flooding.

Compared to other emerging economies in SE Asia (Vietnam, Indonesia, Cambodia, etc) Thailand benefits from a good infrastructure, a free-enterprise economy, and generally pro-investment policies. In addition, they have a good relationship with both ASEAN and Western countries which benefits this export driven economy. All these combine to make Thailand one of the more stable emerging economy growth plays and will help contribute to their continuing growth going forward.

3 thoughts on “Emerging Markets – Thailand”

  1. Yes, Thailand is well worth considering for its investment potential. Don’t be put off by all the negative stuff you may come across about failed investments and scams. Note though that this is a place where you need to do your homework (due diligence) and keep your wits about you. Come here with a “kid in a candy store” approach and you may well attract plenty of people willing to help separate you from your money.

    And yes, do go and visit Steve’s blog, there’s some good practical advice and info available over there.

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