Although it trails the MSCI Emerging Markets Index on a year-to-date basis, the iShares MSCI Thailand Capped ETF (NYSEArca:THD) is still higher by nearly 10% this year. THD’s gain of 2.5% over the past week could be a sign the Thailand ETF is set to deliver more near-term upside.
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.
Although emerging markets exchange traded funds are among this year’s most prolific asset gatherers in the U.S., some market observers argue that emerging markets equities are under-owned by big investors and that the asset class has more room to rally.
“The second largest economy in Southeast Asia (ASEA), Thailand, saw impressive growth in 1Q17 with the support of external demand and public investment. Thailand’s (THD) GDP rose 3.3% in 1Q17 as compared to a 3% rise in 4Q16,” according to Market Realist.
The $391.3 million THD, which debuted more than nine years ago, tracks the MSCI Thailand IMI 25/50 and holds 130 stocks. The ETF allocates 21.7% of its weight to financial services stocks and a combined 28% is allocated to the energy and industrial sectors.
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.
Related: Thailand ETF Trekking Higher
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.
“According to a recent IMF report, Thailand’s economy is projected to grow at 3.2% and 3.3% in 2017 and 2018, respectively. Inflation is expected to be at the lower end of the 1.5%–2.5% range by 2018. Thailand’s economy will continue to be affected by the external environment, domestic political uncertainty, and structural issues in 2017. However, the improved domestic and external demand is expected to boost activity in 2Q17,” according to Market Realist.
For more information on the Thai markets, visit our Thailand category.