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Rebounding Economy & Rising Exports Put Spotlight on Thai ETF

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Thailand’s economy is rebounding with a rise in exports and growth in its tourism sector. GDP grew 4.8%, which is the highest since 2013. After four years of military rule, the central bank kept the benchmark rate a record low for helping the economy to recover. The government has reduced bureaucratic hurdles and has taken initiatives to bring in foreign investments, advancement of technology in manufacturing and infrastructure development. Private investments rose 3.1% as compared to 2.4% in the earlier quarter, indicating that market confidence is returning slowly to the island nation where investors are sniffing better prospects (Read: Emerging Market ETFs in Focus on High Outflows).

The Thai government has been investing heavily in digital technology and infrastructure. This week, representatives from South Korea, Hong Kong, Macau and Singapore will be meeting in Thailand with high priority to economic development agenda. Recently, Money Expo 2018 was organized where insurance firms, brokerage houses and financial institutions discussed and presented their best offerings. The offerings extend from housing loans with zero interest for one year, zero interest for two years in case of reverse mortgages, and deposit rates at 4% to the SME sector.

Eastern Economic Corridor (EEC)

After General Prayut Chan-ocha took control of Thailand via military coup in 2014, foreign companies have preferred the country compared to the likes of Indonesia and Malaysia. Labor-intensive manufacturing is slowly being abolished and investment destinations have been created in the eastern province namely Chachoengsao, Chonburi and Rayong. Industrial townships improve investor confidence and give them a free-hand in functioning without external interference. An EEC bill has been passed to give preference to computing and robotics firms, hinting at the “fourth industrial revolution.” Tax exemption for 15 years, flat 15% tax rate for foreign executives and 99 year land leases are some of the facilities which will be provided. This is an outstanding opportunity and Alibaba, the Chinese e-commerce giant has pledged $45 billion investments for corridor infrastructure projects (read: Thailand Keeps Rates Steady: ETFs in Focus).

In the current scenario, let’s take a look at the Thailand ETF.

THD in Focus

IShares MSCI Thailand Capped ETF THD tracks the investment results of a broad-based index composed of Thai equities MSCI Thailand IMI 25/50 Index. It charges annual fees of 62 basis points and has $475.3 million of assets in its portfolio. Comprising 125 holdings, the fund has daily traded volume of 224,000. From an individual holdings perspective, the fund has high exposure to PTT, CP All and Airports of Thailand, with 12%, 8% and 6% allocation, respectively. Energy, Financials and Consumer Staples are the top 3 sector holdings with 21.7%, 17.5% and 12.4% respectively.  It has returned 3.42% on a year-to-date basis and has an ETF Rank #2 (Buy) (read: Thailand ETF (THD) Hits a New 52-Week High).

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ISHRS-MSCI THAI (THD): ETF Research Reports
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