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Thailand: the road to recovery

July 2020

Orsen Karnburisudthi, Investment Manager, Aberdeen New Thai Investment Trust PLC

  • Thailand has been relatively lightly affected by the Covid-19 outbreak, but tourism levels remain a concern
  • The market has substantially rebounded from its lows, but remains at around 80% of its pre-Covid-19 levels
  • Building resilience is vitally important at a time of considerable uncertainty

Compared to many of its global peers, Thailand has been relatively lightly affected by the Covid-19 outbreak. At the time of writing, it has seen just over 3,000 cases and under 60 deaths. The new government, elected in 2019, is considered to have handled the crisis well, allowing the economy to reopen and businesses to rebuild.

The economy is now finding its way back to some kind of normality. Operating hours in shopping malls have been extended, while bars and nightclubs can operate until midnight and schools have officially re-opened in July. The country still exists under a state of emergency, but in reality, it is almost back to ‘business as usual’, albeit with face masks and social distancing.

In general, this has been supportive for the stock market. While the benchmark Stock Exchange of Thailand index took a significant hit in March, it has substantially rebounded and now sits at around 80% of its pre-Covid-19 levels. (

The one difficult area for the Thai economy is tourism. While certain non-Thais are allowed to enter the country – educational personnel & students, families of residents and those seeking medical treatment - international commercial flights are not likely to resume until at the earliest September. There is some discussion of travel bubbles, but nothing is in place yet. 

Tourism is a major part of the Thai economy, with current estimates putting it at 11-12% of GDP ( Last year, it saw almost 40m tourists, but this year only 14-16m are likely to come as forecasts have been steadily downgraded.

There is still time to salvage the tourism winter high season, which is usually Thailand’s busiest. The government has also put subsidies in place for domestic tourism, encouraging trips to local Thai hotspots. However, domestic tourism can’t fully substitute for international tourism as domestic purchasing power is lower.

The government has also been busy elsewhere: In April, it approved a 1.9 trillion Baht stimulus package. ( This has been a range of soft loans to businesses, plus cash handouts to the unemployed. Policymakers have also been investing in infrastructure and social development - building roads and wells – while also supporting farmers.

Thailand has more leeway than many Western economies. The fiscal deficit will move from a range of 2-3% out to 6-7% this year. The country has low public debt, which may move closer to OECD limits of 60% of GDP this year, but is still considered reasonable on most metrics. The country has no real concerns on its balance sheet with a current account surplus and substantial foreign reserves.

However, the Bank of Thailand is still predicting falls of 8% in GDP this year ( The numbers are bleak, but much of the weakness comes from the hard-hit tourism sector and lower exports while the wheels of consumption and the service sector are reviving.

This is important for us on the Aberdeen New Thai Investment Trust. As investors, we need to focus on those parts of the economy that are still thriving. With this in mind, we have taken some exposure to those companies that benefit from reopening: specialty retailers, beverage companies and convenience stores. However, we have kept our strong emphasis on quality – we do not believe in buying cheap companies just because they are due a rebound. We are looking for companies with long-term growth prospects that have seen a temporary setback, not those that are structurally challenged.

This focus on quality aims to give the portfolio natural resilience. During the crisis, however, we have added in specific areaswhere we have seen the opportunity to build this resilience further: for example, we also initiated a position in Intouch Holdings to sit alongside an existing position in Advanced Info Service. This increased our weighting in quality telecoms companies. In the same spirit, we have been adding to healthcare holdings, including Bangkok Dusit Medical Services, which runs a network of hospitals in the region.

Bangkok Dusit is also a good example of our focus on regional champions: Thailand is increasingly part of a local trading hub with fast-growing neighbouring countries such as Cambodia, Laos, Myanmar and Vietnam. Dynamic companies have sought to take advantage of these new regional ties.

We have lightened our weight in financials, both banks and non-banks, which are struggling at this point in the economic cycle. We have exited property developers, where a prolonged supply and demand imbalance is expected for several quarters. We also took profits in some materials companies. While they should get a boost from government spending and lower energy prices, the retail consumer market is sluggish.

We believe current valuation levels also argue for selectivity. While the market is significantly lower, earnings are lower as well, which has left the valuation of the overall market looking relatively high. We don’t buy the market, but instead weigh the opportunities for this year and next. As such, the aggregate valuation of our portfolio valuation is lower and the growth prospects far higher. Thailand has suffered less than other countries and its economy is now, back on track. That said, there are still areas of weakness and market valuations are relatively high compared to history. We believe resilience comes from selectivity and a focus on quality. This should see the New Thai trust through this difficult period.

Important information

Risk factors you should consider prior to investing:

  • The value of investments and the income from them can fall and investors may get back less than the amount invested.
  • Past performance is not a guide to future results.
  • Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years.
  • The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that any movement in the value of the company’s assets will result in a magnified movement in the NAV.
  • The Company may accumulate investment positions which represent more than normal trading volumes which may make it difficult to realise investments and may lead to volatility in the market price of the Company’s shares.
  • Movements in exchange rates will impact on both the level of income received and the capital value of your investment.
  • There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value.
  • As with all stock exchange investments the value of the Company’s shares purchased will immediately fall by the difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer spread can widen.
  • The Company invests in emerging markets which tend to be more volatile than mature markets and the value of your investment could move sharply up or down.
  • Specialist funds which invest in small markets or sectors of industry are likely to be more volatile than more diversified trusts.
  • Yields are estimated figures and may fluctuate, there are no guarantees that future dividends will match or exceed historic dividends and certain investors may be subject to further tax on dividends.

Other important information: Issued by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Registered Office: 10 Queen’s Terrace, Aberdeen AB10 1XL. Registered in Scotland No. 108419. An investment trust should be considered only as part of a balanced portfolio. Under no circumstances should this information be considered as an offer or solicitation to deal in investments.

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Risk Warning
Risk warning
The value of investments and the income from them can go down as well as up and you may get back less than the amount invested. Please refer to the relevant Key Information Document (KID) prior to making an investment decision. Please be aware of scams that can affect investors.