Thailand ETF: Foreign Investors Flee As Risk Rises

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The Thai government's failure to resolve the ongoing bloody political crisis has put Thailand's standing as an up-and-coming major exchange traded fund ( ETF ) investment destination into question. Despite all political conflicts, however, businesses outside of the conflict zone say they are relatively unfazed.

The government recently rejected a cease-fire plan and said that they won't negotiate until protesters, who want new elections to oust the government that they believe only serves the elites, agree to disperse, report Patrick Barta and Alex Frangos for The Wall Street Journal . The tensions in Thailand stem from its sizable rural underclass and the urban elites who are perceived to control the country's economic and political institutions.

The social unrest has forced some foreign companies to consider moving employees to hotels near airports so that they may escape the country quickly and other investors are shifting their foreign direct investment to other countries altogether. Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney, remarks that he can "find other countries that are more attractive without having to worry about the political situation." [ Is Thailand ETF Worth the Risk? ]

Thailand may be still able to rebound quickly if a resolution is found.

  • The country hosts a far better infrastructure for manufacturing than most of its neighbors, it has survived previous political upheavals and Thailand may still squeeze out growth of 4% to 5% this year on strong consumer spending and exports from areas outside of the conflict zone.
  • Foreign manufacturing plants outside of Bangkok say business is going on as normal, and their investment plans haven't been changed, writes Khettiya Jittapong for Reuters . But risk analysts caution that manufacturers will start to sing a different tune and prepare for contingency plans if the crisis deepens. [ China ETFs Face Challenges. ]
  • Thailand is a major production base for global carmakers and electronics manufacturers. Thai domestic auto sales in April rose 44% in the eight consecutive months of growth. Sales are projected to rise in May as an improving economy boosted domestic demand.

The Thailand ETF may be on the riskier side right now, but there are some funds available that have lesser exposure to the politically troubled country, listed below. [ What's In That ETF You're Buying? ]

For more information on Thailand, visit our Thailand category .

  • iShares MSCI Thailand Invest Mkt Index (NYSEArca: THD )

  • iShares MSCI All-Country Asia ex-Japan (NYSEArca: AAXJ ): Thailand, 2.8%

  • SPDR S&P Emerging Asia Pacific (NYSEArca: GMF ): Thailand, 3.2%

Max Chen contributed to this article.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: AAXJ , ETF , GMF , THD

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