Global Crisis Takes a Hit on Thailand ETF

November 6th at 3:00pm by Tom Lydon

A slowing economy, a down exchange traded fund (ETF) and expectations of interest rate cuts resulted in a drop in yields on Thai government paper.The demand for Thai bonds has surged in expectation of the central bank cutting its key rate by at least 0.25%. Some are expecting a cut of as much as 0.50%, as a result of the global economic crisis and a larger than expected drop in inflation, thanks to lower oil prices and the slowing economy, states Orathai Sriring for Reuters.

Thailand’s central bank’s meeting is in December, but it might move to cut rates before then.

Additionally, the global crisis could be devastating to Thailand’s job market and unemployment rate. As a result of the decline in overseas orders for Thai products, economic growth is estimated to be around 4% for 2009 and unemployment rates are expected to increase, stated Santi Vilassakdanont, Chairman of the Federation of Thai Industries.

To help alleviate these problems, Vilassakdanont suggested a focus on export promotion and that the Bank of Thailand stabilize foreign exchange rates, reports MCOT.

ETFs have taken a hit as well, iShares MSCI Thailand Invest Mkt Index (THD) is down about 54.1% since its April 1 inception.