Thailand is known as a tourist destination. However, it is also an increasingly important industrial power. And it has been registering very high growth rates. For those interested in investing in Thailand, we analyze its most important stock market indices.
Thailand is one of the most popular tourist destinations in Southeast Asia. In fact, its capital, Bangkok, is one of the 10 most visited cities in the world. However, Thailand has much more to offer to the global economy.
It is an emerging country of more than 70 million people. To put this in perspective, only Germany has a larger population within the European Union.
In addition to that, Thailand has had several decades of strong economic growth. The reforms implemented in the mid-1980s brought a lot of prosperity, making it possible for Thailand to attract foreign investment for the first time in its history.
Despite the Asian financial crisis of the mid to late 1990s, Thailand, like the rest of its neighboring countries, returned quickly to the path of economic growth. And it has never looked back. Its industrial and energy sectors have developed tremendously.
As a result, living conditions for the population have improved markedly. At the same time, the Stock Exchange of Thailand, known as SET and located in Bangkok, is the second largest by market capitalization in Southeast Asia, only after Singapore. It is also the 25th largest in the world.
The Thai currency is the baht, whose ISO code is THB. It should be noted that it is one of the strongest emerging market currencies in the world. Since the beginning of the 21st century, the baht has managed to appreciate against virtually all other currencies, including the US dollar and the euro.
For those interested in investing in Thailand passively through an ETF, we analyze its most important stock market indices in the next few sections.
The SET 50 is the main stock market index in the country. The index is calculated by the Stock Exchange of Thailand, hence the name SET, and includes the 50 largest listed companies, as long as they meet the necessary liquidity and corporate structure criteria.
The index was created in 1995 with an initial value of 1,000 points. After the crash it suffered in the late 1990s, it has been one of the best performing stock market indices since the beginning of the new century. The main version of the index is published in local currency, although versions in other currencies are also available.
Within the SET 50, companies are weighted according to their market capitalization, hence the largest tending to dominate. Although it is important to clarify that certain shares can be excluded from the computation to account for the free float.
Finally, we must also mention that the index is updated twice every year, with the aim of keeping it up to date as changes take place in the overall economy. If you want to learn more about the SET 50, you can visit the website of the Stock Exchange of Thailand.
The SET 100 is a very similar index to the SET 50. For practical purposes, it is the same stock index, with only one difference: the SET 100 includes the 100 largest companies in the country, instead of 50.
As a result, it allows us to invest our money in smaller Thai companies. However, it is important to remember that corporations are weighted according to their size within the index, making the correlation between the SET 50 and the SET 100 very high.
More details about the SET 100, including the complete list of companies included in the index, can be found on the SET´s website.
Thirdly, the MSCI Thailand is a stock index calculated by the US company MSCI. The number of companies within it is not constant, but fluctuates over time.
Thus, the MSCI Thailand is composed of all Thai companies that are part of the global MSCI Emerging Markets index. Depending on when we look into it, we will find between 40 and 50 stocks within the index.
The MSCI Thailand weights stocks based on their free float-adjusted market capitalization. And the index is updated regularly throughout the year with the goal of keeping it representative of emerging markets in general, and Thailand in particular.
Some of the largest corporations in the index are Gulf Energy Development and Airports of Thailand, the operator of the country’s airports.
Additional details about the MSCI Thailand can be found on the MSCI website.
Finally, the FTSE Russell company, a subsidiary of the London Stock Exchange that calculates stock market indices, also publishes an index for Thailand. In fact, this index was introduced in 1986.
Thus, the FTSE Thailand includes all Thai companies that are part of the FTSE All World stock index. As a result, the number of constituents fluctuates over time.
FTSE indices are usually a good alternative for those looking for passive funds through which to invest in a country. You can find more information under this link.
I hope you found this post about Thailand´s top stock market indexes useful. If you want to learn about stock market indexes from other promising countries, check out the following sections:
Funds and ETF
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