ETF Expert

In 1987, I visited the Thai stock exchange. I don’t remember seeing a single computer. (There must have been an IBM mainframe somewhere, right?)

Yet I do recall a huge whiteboard with the same dimensions that you might have seen in a 2-star, Vegas Sports Book. Participants scribbled prices and ticker symbols, then quickly erased them using the backs of their hands. Let’s just say… this was not 1/2 as sophisticated an operation as one could have found in Taiwan or Hong Kong; it wasn’t 1/20 as sophisticated as Wall Street’s NYSE.

I’ve been in Bangkok as well as other parts of Thailand many times since. However, my original trip 23 years ago was my only visit where I happened to sojourn to the financial district.

It’s fairly safe to say, though… a lot has changed over the decades. Thailand may or may not still lead the world is sex tourism. (”One night in Bangkok makes a hard man crumble.”) Nevertheless, the broader Thai economy may finally be getting the world’s respect.

Thailand’s 1.0% reported unemployment figure is the lowest in SE Asia. Its 16% quarterly GDP growth for Q1 is second only to Singapore’s growth. Alongside Indonesia, Thailand is one of the very few international markets with 2010 gains in US dollars.

Performance? Over the last 2 years 6/9/2008-6/8/2010, the iShares Thailand Market Index Fund (THD) has outperformed regional funds like iShares Asia 50 (AIA), conceptual funds like Claymore BRIC (EEB) and broad emerging market benchmarks like Vanguard Emerging Markets (VWO).

Some attribute Thailand’s exceptional performance to the relative safer haven of emerging market banks; that is, developing market banks are well-capitalized and well-funded, whereas developed world banks carry scores of “troubled assets” on the books. Tom Lydon points out that a number of single country ETFs have their largest weighting in the financial sector, including Market Vectors Indonesia (IDX) and iShares MSCI Thailand (THD). 

Others have suggested that Thailand’s long history of politcal turmoil will be its ultimate undoing. Protests against the government occurred as recently as this past April, while officials expect GDP to be adversely affected by weeks of violence early in Q2.

However you look at it… the current technical uptrend is defying the odds. Thailand equities a safer haven? I may have to “erase” my memory of my visit to the Bangkok Exchange in 1987.

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