In a year when emerging markets exchange traded funds are roaring back, some are going overlooked, including the Global X FTSE ASEAN 40 ETF (NYSEArca: ASEA). ASEA focuses on southeast Asian economies, including Singapore, Malaysia, Indonesia, Thailand and Philippines.
ASEA’s tilt toward Southeast Asian economies makes the ETF worth a look because some of those countries, including Indonesia, the region’s largest economy, are back to delivering impressive returns for investors.
Earlier this year, Indonesian markets bounced after parliament approved a tax amnesty that the government believes would draw in billions of dollars to finance a budget gap as the country invests to expand its infrastructure in a bid to stimulate economic growth, Bloomberg reports.
The central bank calculated that the tax program could draw 560 trillion rupiah, or $42.5 billion, back into the country, with almost 30% or 165 trillion rupiah, going to the government.
President Joko Widodo’s government is facing a widening budget deficit and is anticipating the tax amnesty to help bring finances back in to balance.
Bolstering the case for ASEA are improving GDP figures from some of the ETF’s member countries.
“Indonesian GDP picked up slightly in Q2 to 5.18%, the fastest in 2 1/2 years, helped by increased government spending. The Philippines recently recorded a Q2 GDP growth rate of 7% annualized despite the forecast GDP of just 6.0% for 2016. Vietnam growth also increased in the second quarter to reach 5.6% annualized. Thailand growth accelerated to 3.5% annualized, its strongest quarterly reading in three years. Thailand has been the laggard of ASEAN recently,” according to a Seeking Alpha analysis of ASEA.