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The Thai firms capitalising on Burma's open door
by Sarah Miloudi on Feb 20, 2013 at 09:49
As a result, the manager of the £108 million trust said, sentiment had been boosted and he believes that even after strong gains in the Thai equity market in December, companies and their investors stand to reap the benefits of these reforms.
Thailand’s biggest risk
But while these steps intended to boost growth are positive, Vanabriksha cautioned that Thailand’s difficulties are far from over. He said the political landscape remains a risk, and despite navigating a change in leadership last year to post the investment trust sector’s best returns, Vanabriksha believes that instability within the Thai government will continue to pose a threat.
‘Terms are four years but the government changes more often and that can affect everything. I think the main risk here is politics,’ he said.
Vanabriksha added that former prime minister Thaksin Shinawatra, who was forced to relinquish power in 2006 following a military coup, remains an influential but divisive figure, and this could disrupt Thailand’s leadership.
As a bottom-up investor, Vanabriksha said he is confident he and the Aberdeen New Thai team can put these tensions to one side and find companies that can overcome these challenges.
Last year, the vehicle notched up a 56% share price total return and a net asset value total return of 49%, while the FTSE Thailand index gained 35%.
‘Thailand has had a lot of big picture macro problems over the last few years, such as the coup, problems snowballed from the yellow and the red shirts [supporters of and opponents of Shinawatra respectively] and it became a real mess,’ Vanabriksha said.
‘At a stock level though, we had a really good time. The companies are really good [in Thailand] and are doing well, and geographically they are well situated. Within a few hours’ flight Thailand is within reach of a two to three billion population.’
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