As Japan ramps up its aggressive stimulus efforts, all the extra cash floating around the markets could help benefit Thailand’s economy and country-specific exchange traded fund.
The iShares MSCI Thailand Capped ETF (NYSEArca: THD) has gained 1.7% over the past week and increased 23.1% year-to-date.
Thailand is the third-largest locale for Japanese foreign direct investment this year, attracting $2.6 billion in Japanese FDI over the first half of the year, reports Wayne Arnold for Barron’s.
China is Japan’s second-largest investment destination, pulling in $2.9 billion in new Japanese investments over the first half, but anti-Japanese sentiment, along with rising production costs, has pushed down investments to China by 42%.
Moreover, Thailand is also attracting a large chunk of Japanese credit, with the country now the second-largest destination for Japanese bank lending in Asia after China. Over the second quarter, Japanese loans to Thailand expanded 75% to $77.5 billion.
While some observers may believe Thailand is still rife with political volatility, especially after the military took control in May, Thailand’s economy and incomes have historically expanded faster and remained more stable under the three times the military led government, compared to the nine civilian ones. [Thailand Stocks, ETF Flourish Under Military Rule]
Nomura calculates that Thailand’s economy will expand 1.1% this year and rise to 3.3% next year.
Fueling the investments into Thailand, the Bank of Japan announced that it will triple its pace of purchasing stocks and property stocks and increase its asset purchasing program to 80 trillion yen, or $724 billion, from 60 to 70 trillion yen. [Japan ETFs Find Double Support From BOJ, Pension Fund]
Furthermore, the increase in the BOJ’s quantitative easing could help offset some of the easy money flows that was turned off after the Federal Reserve ended its own QE program last week.
iShares MSCI Thailand Capped ETF
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