Investment Adventures in Emerging Markets

Comments on Thailand

We must remember that Thailand has been the subject of political turmoil since the end of absolute monarchy in 1932.  Since that time, the country has had 27 prime ministers, 18 constitutions, 20 successful and failed coups, and many violent demonstrations.  As a result, local and international investors have become accustomed to these events and have not been sellers at such times.

Although the recent disturbances have impacted a central part of Bangkok, the majority of the rest of the country has not been impacted and it is business as usual.  In fact, a few weeks ago the Bank of Thailand raised its forecast range for GDP growth this year to between 4.3% to 5.8% from the original 3.3% to 5.3%, as a result of Thailand’s export-driven economy benefitting from the strengthening of global demand.

Domestic investment has risen by 18% on an annualized basis in March because of investments by export-oriented manufacturers investing for increased production. Domestic demand is also healthy with March consumption up 8.7% on an annualized basis.[1] Since the time when protests started in March 2010, the Stock Exchange of Thailand Index has risen over 4% while the MSCI AC Asia ex Japan Index has declined by 3.5% during the same period.[2] Nevertheless, in downtown Bangkok, large shopping centers and hotels are taking a big hit because of the roadblocks, with some malls being set on fire by rioters.  Tourism accounts for about 6% to 7% of the Thai economy and that will slow down this year.[3] Fortunately, the disturbances coincide with the traditionally low tourism season.

[1] Source: Bank of Thailand, as of April 30, 2010.

[2] Source: Factset, in local currency, for the period of March 15 to May 19, 2010.

[3] Source: Tourism Authority of Thailand, as of end March 2010.

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