THD ETF

Thailand's economy should fully bounce back by late 2024 or early 2025, but growth still lags behind regional peers. The World Bank projects Thailand's economy to grow by 2.4% in 2024 and 2.8% in 2025, slower than other regional markets. Thailand's tourism industry is showing signs of recovery, with the potential for tourist arrivals to reach pre-pandemic levels in 2025.

Thailand stock market underperforms due to weak tourism, exports, and political instability, leading to a significant decline. The decline has seen some cheapening up of valuations, particularly compared to some of its Southeast Asian neighbors. Government measures coming up soon include cash handouts, relaxed visa rules, and specific measures to boost stocks.

Thailand's political situation is pretty unstable, and markets are reacting to a corollary of that, which is a scramble to get political rate policy done at the central bank. The baht is down, and market reforms after some accounting incidents have led to a difficult 2023 and also the beginning of 2024. The market is also quite richly valued, led by the businesses that might have been interesting in a weak baht environment.

Thailand has not been a happy hunting ground for investors in recent years. The macro/micro setup offers little hope of an equity turnaround anytime soon. Pending a step change in the fundamental outlook, I won't be buying this dip.

Thai markets have performed poorly, but the macroeconomic and monetary situation is stable and fiscal stimulus is expected. However, the somewhat higher PE ratio remains, and there are high expense ratios associated with THD due to the markets it invests in. While the Thai economy doesn't raise exceptional concern, valuations of THD are not compelling.

Thailand's political overhang has finally cleared. Instead, markets will now have to contend with a fiscal overhang. Thai valuations are still pricey and remain vulnerable to future disappointments.

iShares MSCI Thailand ETF offers coverage to less than 150 Thai stocks. The Thai economy is currently facing challenges, with lower-than-expected GDP growth, weak industrial conditions and an unappealing export backdrop. We like the risk-reward on the charts, although valuations are not too compelling.

The near-term macro backdrop isn't great for Thai equities. Nor is the ongoing political wrangling post-elections. The iShares MSCI Thailand ETF is still pricing in a blue-sky outcome and looks vulnerable.

Thailand's economy is poised for recovery, with tame inflation and potential tourism resurgence in 2023. Equities are trading at reasonable valuations, but other emerging markets may offer more compelling opportunities. iShares MSCI Thailand ETF has declined 27% in the past five years and has not yet returned to pre-COVID highs.