The iShares MSCI Thailand Capped ETF (NYSEArca: THD) has been a stellar performer among emerging markets single-country exchange traded funds, surging more than 33% over the past year. THD is extending that ebullience to start 2017 with a January gain of 3.6% and some market observers believe Thai stocks can continue climbing.
While some observers may believe Thailand is still rife with political volatility, especially after the military took control last year, 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.
Thai stocks could also be supported by the country’s Social Security Office’s bid to up its equity positions while trimming its holdings of sovereign debt. “The fund has overweight holdings on commerce, telecommunication and health-care companies as they’re less affected by energy prices and slower global growth,” according to Bloomberg.
Two years ago, the Thai parliament voted to impeach former Prime Minister Yingluck Shinawatra and moved forward with criminal charges against Shinawatra for her role in a rice price-fixing scandal.
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.
“Long-term the trend is healthy with strong, consistent capital flows. This speaks well of how the business world perceives Thailand as a place to invest money for a future return. There are periodic outflows, such as the more recent ones, however, seen in historical context this is more an exception than a rule,” according to a Seeking Alpha analysis of Thai economics.
A strong currency is part of the allure with Thailand, an important point when considering THD is not a currency hedged ETF, meaning investors should want to see the baht strong against the dollar.
“The Thai baht is Goldman’s favorite emerging Asia currency because of its strong current account position. Goldman estimates that Thailand can run a current account surplus to the tune of 8.8% of GDP this year,” reports Shuli Ren for Barron’s.
For more information on the Thai markets, visit our Thailand category.