Over the past four decades Thailand has made remarkable progress in social and economic development, moving from a low to upper income country in less than a generation. And this has translated into strong growth for Thai equities. Over 20 years to 29 May 2020, the Stock Exchange of Thailand made a total return of 1,270 per cent or14 per cent a year. By contrast, over same period the FTSE All-Share index made a total return of 124 per cent, or 4 per cent a year.
But Thailand’s economy has been hit by the coronavirus outbreak. In particular, travel curbs on foreign arrivals and the closure of pubs and sports stadiums will have a negative effect on the economy and corporate earnings in the near term.
Orsen Karnburisudthi, manager of Aberdeen New Thai Investment Trust (ANW), says that the country’s fundamentals prior to the Covid-19 outbreak were robust. He adds: “Thailand is home to some outstanding businesses, which provide goods and services both domestically and overseas. When the economy does recover, key beneficiaries will include exporters, consumer companies and services sectors, such as healthcare and, eventually, tourism. Many of Thailand’s companies have a wider regional exposure, trading increasingly with, and investing in, nearby fast-growing countries such as Cambodia, Laos, Myanmar and Vietnam. Thailand’s position as a regional hub gives sufficient diversity, but often less vulnerability to global dislocations.”