The once high-flying iShares MSCI Thailand Capped ETF (NYSEArca: THD) has been bitten by the same bug that has plagued so many emerging markets funds this year. Once a leader among single-country emerging markets ETFs, THD has been wracked by a slumping currency, slowing economic growth and fears of the Federal Reserve tapering its quantitative easing program.

Since tapering became a legitimate fear on May 22, THD has plunged 23.6%, putting the lone Thailand ETF firmly in bear market territory. Making matters worse, Thailand’s second-quarter GDP reading was the second consecutive quarter of contracting, the definition of a recession. [Emerging Markets ETFs Slammed by Fed Tapering Talk]

THD is joined by other previously hot single-country ETFs for developing economies as the worst performers in recent months as emerging markets investors have become increasingly jittery over the prospect of Fed tapering. And despite last week’s 5.8% pop for THD, some remain skeptical on the near-term outlook for Thai equities. [BRICs Leading Emerging Markets ETFs]

Last Friday, Goldman Sachs “cut its rating for Thailand to marketweight from overweight, citing concerns about high leverage and the potential for higher levels of non-performing loans, as the economy slows,” reported Leslie Shaffer for CNBC.

The combination of a weakening economy and the potential for an increase in bad loans is problematic for THD because, like so many other emerging markets ETFs, the fund is heavily allocated to the financial services sector. To be precise, financials account for 34.78% of THD’s weight, more 1,500 basis points ahead of the ETF’s second-largest sector weight, energy.

While the near-term fundamental outlook for THD does not look promising, the technicals are not much better as the ETF resides 5.6% below its 50-day moving average and 13.6% below its 200-day line.