A Growth Surprise from Southeast Asia

Video Transcript

Hi, this is Rudy Martin for Uncommon Wisdom Daily.

The global economic slowdown is hurting countries around the world, and especially emerging economies that rely on international demand for their exports. But there’s one country in Southeast Asia that I think will provide a near-term growth surprise for investors: Thailand.

Fifteen years ago, Thailand’s current account balance was falling, inflation was rising and its overall debt burden was growing. The Thai baht crumbled 60% against the U.S. dollar, forcing the country to take action to stabilize its government and increase productivity.

Thailand faced another setback last year, when severe flooding caused a slowdown in manufacturing, exporting and overall economic growth.

But Thailand is recovering. In the most recent quarter, its economy grew by 3.3% annualized, and it’s expected to speed up to 4.2% for the full year.

Meanwhile, Thailand’s debt-to-GDP level is a very low 42% and falling. By comparison, Japan’s debt-to-GDP ratio is 60%. And our government’s free-spending ways have pushed the U.S. debt-to-GDP level above 100%.

But what’s really grabbing investors’ attention are Thailand’s corporate earnings. They’re expected to surge by more than 17% this year.

In response, global capital has been flowing into the country, pushing the Stock Exchange of Thailand Index up roughly 24% this year, making it one of the best performers in the world.

I’m betting that this trend will continue, and we’ll see more money from foreign funds flow into Thai equities in the next quarter. In addition to Thailand’s improving fundamentals, the government has committed to spending $63 billion on the country’s infrastructure. And that stimulus program hasn’t been factored into stock prices yet.

International investors also won’t have to worry about interest rate cuts for the foreseeable future — Thailand’s central bank recently said that the nation’s economy is recovering faster than expected, making further monetary easing unnecessary.

Longer-term, Thailand will continue to benefit from its geographic sweet spot, in the center of Southeast Asia. And as labor costs in China escalate, Thailand will begin to attract Chinese companies looking for less-expensive places to manufacture their goods.

So my advice would be to invest in Thailand before the crowd does.

I’m Rudy Martin for Uncommon Wisdom Daily. Thanks for watching.

Rudy Martin, editor of Global Trend Trader, is the President at Acamar Global Investments, with 25 years of experience serving institutions and high net-worth individuals.

Rudy started his investment career in 1983, co-managing a $2 billion private investment portfolio for Transamerica. Later, he went on to Wall Street as an equity analyst for Dean Witter and traveled globally, serving major institutional equity investors. In 1995, he joined Fidelity Investments as a Senior Investment Analyst for a series of multibillion-dollar fund portfolios.

During his career, Rudy has received awards for institutional investing and is widely quoted in the financial press and on television about topics related to global investing and emerging markets. For more information on Global Trend Trader click here.