Thailand ETFs: Thai economy bouncing back from floods

May 10th, 2012 | By | Category: Equities

Despite the devastating floods that hit Thailand in 2011, forcing a freeze in automotive and computer chip manufacturing critical to the global supply chain, the country’s GDP is expected to reach 6% this year according to the Bank of Thailand.

Thailand ETFs -Thai economy bouncing back from floods

The latest Bloomberg Emerging Markets report ranked Thailand second only to China as one of the most-promising emerging and frontier markets for investors.

In fact, the latest Bloomberg Emerging Markets report ranked Thailand second only to China as one of the most-promising emerging and frontier markets for investors. The ranking looked at a series of measures such as market transparency and prospects for growth over the next four years. Thailand was also ranked as the easiest place to do business of all top 15 emerging markets in the study.

Thailand’s government has invested over $11 billion in future flood defences to protect the country’s infrastructure which plays a significant role in attracting major investments from the world’s most innovative companies, including GE, Ford, Kraft and Pfizer. The Thailand Board of Investment, the government’s investment promotion agency, recently reported that despite flooding, foreign investment applications for Thailand increased by 92% year-over-year in the first two months of 2012, to over $5 billion.

“Thailand’s strategic location at the centre of Asia is an asset that will only increase as the new industrial economies and their populations’ GDP and purchasing power rise,” said Atchaka Sibunruang, Secretary-General of the Thailand Board of Investment. “Our country’s world-class infrastructure is comprised of well-developed supply chains for automotive and technology manufacturing and our workforce has a knowledge base in those industries that has advanced for decades. These strong economic fundamentals will continue to solidify Thailand as a leading economic power in the future.”

iShares MSCI Thailand Investable Market Index Fund (THD)

3-year investment performance

Thailand’s strengths lie in its position as the largest car manufacturer in Southeast Asia and the producer of around 40% of the world’s computer hard disk drives.

The country’s vast natural resources have also made it the world’s top producer of rubber, the second largest exporter of sugar and the top rice exporter. These assets, along with quick access to 575 million of Southeast Asia’s consumers, make the country a prime investment location for multinationals in the decades ahead.

With manufacturing expected to fully recover to pre-flood levels by the end of the second quarter, and domestic and export markets on the rebound from the global financial crisis, Thailand’s location at the centre of Asia’s rapidly expanding consumer market looks ever more attractive to future investors.

Investors can gain exposure to Thailand via ETFs from DB X-trackers and iShares. Both funds track the MSCI Thailand Index.

The MSCI Thailand TRN Index is a free float-adjusted market capitalisation index reflecting the performance of the Thai stock market by including common shares and some preferred shares of all large- and mid cap companies with a market capitalisation within the top 85% of the Thai market investable equity universe. The index is calculated on a total return basis with net dividends reinvested. The index is reviewed and rebalanced on a quarterly and semi-annual basis and may also be rebalanced at other times in order to reflect corporate activity such as mergers and acquisitions.

DB X-trackers MSCI Thailand TRN Index ETF (XCX4)
TER 0.50%
Fully-collateralised synthetic replication methodology
London listed
UK Reporting Status, eligible for ISAs and SIPPs
Cross listed on SIX Swiss, Singapore SGX-ST, Borsa Italiana and Deutsche Börse

iShares MSCI Thailand Investable Market Index ETF (THD)
TER 0.59%
Physical replication methodology
NYSE Arca listed
Eligible for SIPPs

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