Investing in Thailand: Revolutionizing Global ETF Investments
Ryan Cole, The Investment U Research Team
Buy when there’s blood in the streets, indeed.
Every investor knows the phrase, but very few have the required fortitude to actually put it in practice. When there’s blood on the streets, most investors bail and head for cover as fast as they can.
But the sentiment goes double when the blood is literal – like we’ve recently seen in one Southeast Asian country, formerly thought of as one of the most stable in the region… but now, somewhat unfairly, considered just as bad as the rest.
I’m talking about Thailand – a country no self-respecting investor would go near with a ten-foot pole.
Right?
After all, they just had a civil war… or something… right?
Well, not exactly.
The Bloody Non-Revolution
It’s true, the literal blood fell in Thailand this past April, when supporters of the former Prime Minister, Thaksin Shinawatra – often called red shirters, for their sartorial choices – rose up and protested in the streets.
They occupied Bangkok’s main airport for a week last year… they drove ASEAN leaders out of the country, breaking up a conference, this spring… and they demanded the dissolution of the government, back in April.
It was looking pretty bad for a bit.
The thing is, the movement is dead. Completely dead.
Thaksin’s lost his passport, and there’s an arrest warrant on his head. He’ll spend the rest of his days dodging Thai officials.
Leaders of the red-shirts turned themselves in – they just walked into police stations with their hands held together before them.
And now, no one fears a civil war at all. The reason is simple. The King.
R-E-S-P-E-C-T
It’s hard for westerners to get how respected the King is, because there is no one held in such reverence in our hemisphere. Perhaps if Jesus himself ran for President, it’d come close – but even then, there’d be some grumbling from atheists and those concerned about the church-state separation.
No one grumbles about the King.
It’s actually illegal – though it needn’t be. The surest way to form an angry mob is to say the King’s tie is ugly in a Bangkok street – you’ll be running for your life.
Thai citizens still, in a very sweet and real way, love their King – and they look to him as an arbiter when things get dicey.
This April, Thaksin asked for the King’s support in getting reinstated – and he got a cold shoulder instead. When the arrest warrant went out, the King said nothing – lending his tacit approval to the crackdown on red-shirters.
And that was that. There’s no chance of a civil war now – it’d be tantamount to disobeying the King. No Thai could ever stage a coup without his approval. The danger’s passed.
Foreign investors, however, are a skittish bunch when politics are in doubt, so they still haven’t returned. They want to see a few years of peace before dipping their toes back in the water – because they don’t understand that, in this place, there’s no danger left.
In other words, we’ve got ourselves a perfect buying opportunity, with sentiment lagging far behind reality.
Not Just The Land Of Smiles – The Land Of Profits, Too
Furthermore, Thailand’s long-term outlook is extremely sunny. Yes, their export business – over 60% of GDP – has suffered in the global downturn. But that’s already priced in to stocks.
And over the next few decades, Thailand is a brilliant hidden play on two of the best emerging markets of the world: China and India.
As a major trader with both countries, Thailand will benefit enormously from their growth. And, as one of the premier vacation spots in Asia, Thailand is also looking at decades of a booming tourist business, as Indians and Chinese start to achieve middle-class prosperity in large numbers.
Frankly, Thailand is far enough away – literally halfway around the globe, 6 a.m. here is 6 p.m. there – that the U.S. economy is a distant echo. It’s much more about China, India, and the other Asian giants. And, in today’s world, that’s exactly where you want your money to be.
If you want to get in on Thailand’s artificially depressed prices before Wall Street wises up, I’d suggest looking at iShares MSCI Thailand Index Fund (NYSE: THD). It gives you easy access to the biggest and best Thai companies, without worrying about overseas trading or currency conversion.
It’s extremely difficult to buy Thai stocks outside of Thailand – the exchange is still relatively young. That’s another good reason to jump in now – before it’s discovered and heavily traded, like anywhere else – but it’s also a reason to let an ETF handle the headaches of trading.
In short, Thailand will benefit from exceptional growth in its two largest neighbors. Buy the
Thai fund, and as confidence in the Thai democracy returns you’ll be able to tell friends you got in before the crowd.
Good investing,
Ryan Cole
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August 9th, 2009 at 2:58 pm
Has Ryan Cole ever been to Thailand????
First, it was the Yellow Shirts that occupied the airport last year, not the Red Shirts.
Yes, the King is highly respected, but he is also about 80 years old and in declining health.
Thaksin still has a huge following and an integral part of their platform is amnesty or pardons for his crimes so that he could return to politics.
In my 12 years of living in Thailand, I can’t remember seeing more that a few of either Chinese or Indian tourists.
All that said, I am very positive on investing in Thailand, and most of our family money is there (my wife is Thai).
The SET (Stock Exchange of Thailand) publishes the amount bought and sold by local individuals, local institutions, and foreigners each day.
The best market indicator I have found is net foreign buying. When foreign money is flowing into the market, the market generally rises and the local currency strengthens (as is the case presently). However, the reverse happens as well.
My favorite two stocks presently are BANPU and CPF. Banpu mines coal, some in Thailand but mostly in Indonesia for shipment to China. First quarter profit was nearly three times first quarter profit last year.
CPF is into animal feed, meat production and aquaculture (shrimp, fish). They just announced second quarter profits that are substantially improved and they appear to result from operations and market improvements, not any kind of one time event or accounting gimmicks.
Good luck.
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