Markets

The secret of Thai ETF's 42% gains

Despite political uncertainty, Thailand is behind only Colombia so far this year as far as single-country ETFs go. Given the dearth of Thai ADRs out there, THD may provide a unique opportunity.

THD is up 42% year to date. That is spectacular performance by any standard, but it is especially noteworthy when you consider that the broad Bangkok market (as represented by the SET index) is up only 29%.

Furthermore, the lion's share of the portfolio's returns have come from stocks that U.S. investors will have a hard (or impossible) time accumulating. For example, PTT Chemical PCHUF is extremely thinly traded, yet is one of the top-performing stocks in the world this year -- up 83% YTD -- and the top holding in THD, with 10.77% of the overall portfolio. Likewise, Bangkok Bank BGKKF is not a highly liquid ADR, but with 9.23% of THD's holdings wrapped up in this stock, U.S. investors are unlikely to get exposure in any other form.

In fact, even moderately widely traded ADRs -- KPCPF, AVIFY, CPOKY, HNMEY, PEXNY and SAVXY -- only account for 25% of THD and about 25% of its overall YTD performance. In theory, you could have replicated THD's gains by just buying these six stocks, but a six-stock basket is not exactly highly diversified when you consider that the other 80 stocks in the portfolio provide much broader access to Thai banks and consumer companies.

Most notably, construction and hospitality stocks are missing from the ADR list. Both of these sectors have been dead money this year -- on global recession fears and the spring political upheavals in Bangkok, respectively -- and so both could be due for a rebound. If so, ADR-only investors would be out of luck.

One only moderately liquid ADR that might be worth fighting for: Charoen Pokphand Feedmill (CPOKY). This stockyard operator does not trade all that often in the United States, but is up a staggering 141% so far this year, largely due to the prospect of increased demand for meat in China and throughout Asia:

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


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

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