It has been three months since I last visited Thailand and I really had no intention of writing this article, that was until I received an email fromInternational Living about retiring in that country. No, I have no intention of doing that. Retirement is not in my vocabulary. But the email mentioned someone by the name of Leo Ellis who retired to Thailand five years ago at the ripe age of 87. He loves it there in Chiang Mai.
The part that really caught my attention is what he said about leaving his home for a few days to visit a resort in Kata. “It’s just a very quiet place where you hardly see anybody, a place for reading and drinking beer,” he said. Reading and drinking beer! Oh what bliss, but after a few beers I would want to fall asleep in my hammock. Oh, he does that as well.
This article got me wondering if things in Thailand are improving, and upon doing some cursory research, the answer appears to be maybe, finally. According to Bloomberg’s article titled, “Thai Economy Expanded More Than Expected in Second Quarter,” it appears that in the quarter ending June 2016, GDP growth year over year was 3.5%, which is obviously good news.
But upon digging a little deeper, the reason for the growth was increased government spending, though exports have fallen. According to the Straits Times, the Thai military plans to overhaul the economy with a three pronged approach, “an infrastructure build-up to boost connectivity, a restructuring of Thailand’s industrial base to move it away from equipment manufacturing operations to higher value-added industries, and a sweeping reform of the vast agricultural sector.”
I am sure this would help a great deal, though I would have preferred infrastructure spending to be mentioned last. As happens so often, government spending on infrastructure goes out of control and depresses revival in other sectors. However, the equity markets are doing well with the SET 50 up about 13% YTD and the iShares MSCI Thailand Capped ETF (THD) up around 20%.
One stock I would like to bring to the notice of investors is that of Airports of Thailand (AOT), the majority of which is owned by the government (70%) with the rest trading on the Bangkok Stock Exchange. The stock is up 14% YTD, and if there is an increase in infrastructure spending, then this stock may well benefit.
Peter Kohli is the CEO of emerging market specialist DMS Funds.