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Tap Emerging Asia's Growth Potential With These ETFs
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Emerging Asia, as per IMF, includes countries like China, India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam. With great growth potential in the medium to long term, investing in this group of nations can prove to be beneficial.
While several rating agencies have lowered the 2023 GDP growth forecasts for certain countries, their upward revisions for 2024 indicate promising investment opportunities in these nations.
Below, we highlight the funds with exposures to Indonesia, Malaysia, the Philippines, Thailand and Vietnam for investors to gain exposure and tap the growth potential of the emerging Asian countries. However, recent events like the Gaza militants' attack on Israel and declining exports due to the Chinese and the EU economic slowdown, have introduced volatility in the mentioned funds.
Indonesia
The largest economy in the Southeast region of Asia, Indonesia's robust growth is expected to persist until at least 2030. The country’s economic growth is fueled by the acceleration in household consumption by the growing middle class, constituting about half of Indonesia’s GDP, according to International Banker.
The surge in commodity prices for its primary export goods as well as an uptick in tourism levels, has prompted an upward revision in Indonesia's growth forecast for 2024, now projected at 5.1%, up from 2023’s estimate of 4.7%.
According to Reuters, in September, Indonesia's annual inflation rate eased to 2.28%, marking the lowest inflation rate recorded since February 2022, aligning closely with market expectations and approaching the lower threshold of Bank of Indonesia’s target range. Analysts are anticipating that the bank will maintain its rates at 5.75% for the ninth consecutive month, as per Reuters.
Funds like VanEck Indonesia Index ETF (IDX - Free Report) and iShares MSCI Indonesia ETF (EIDO - Free Report) can help gain exposure to the country.
Malaysia
According to the World Bank's latest report, as per The Star, Malaysia's economic growth for 2023 is forecast to moderate to 3.9%, down from the earlier projection of 4.3% in April, primarily attributed to a significant slowdown in external demand.
Despite concerns, the World Bank forecasts Malaysia's economy to grow by 4.3% in 2024, supported by a global economic rebound, higher oil prices, increased domestic demand, rising investments, tourism sector recovery, and easing inflation.
According to prime minister Anwar Ibrahim, as quoted on Reuters, the country is aiming to achieve private investment levels of about $64 billion annually as well as economic growth of 5% until 2025.
iShares MSCI Malaysia ETF (EWM - Free Report) is a pure-play Malaysia ETF and has gained about 2.86% over the past three months (as of Oct 10).
Philippines
According to Investing.com, underscoring the Philippines’s post-pandemic recovery, the International Monetary Fund downgraded the country’s GDP growth rate for 2023 to 5.3% from the previous estimate of 6.2%. Even after the downgrade, the Philippines’s economy is still expected to be one of the rapidly growing economies in Asia.
An expected boost in government spending and rising export demand are set to drive the Philippines's growth to 6% in 2024, as projected by the IMF. Strong domestic demand, led by private consumption and decreasing inflation, will further fuel the robust growth outlook.
Philippine Finance Secretary Benjamin Diokno, as quoted on Reuters, said that the country is putting an end to its hawkish stance, although the inflation levels still remain above the central bank’s benchmark levels. The country’s central bank, the Bangko Sentral ng Pilipinas, has kept the benchmark interest rate steady at 6.25% in its last four meetings.
Investors can look at iShares MSCI Philippines ETF (EPHE - Free Report) , which has gained about 11.30% over the past year (as of Oct 10).
Thailand
Rebounding tourism and growth in the private investment levels helped support the country’s GDP growth in 2023. Expected to maintain a steady growth rate over the next decade, Thailand’s economy is projected to increase to $860 billion by 2032.
Thailand's economy is poised to become one of the trillion-dollar economies in the Asia-Pacific region, driven by strong private consumption due to rising urban household incomes and sustained tourism from populous Asian emerging markets, according to S&P Global.
Headwinds resulted in Thailand’s central bank downgrading its growth forecasts for 2023 to 2.8% from the previously estimated 3.6%.
However, according to Reuters, with no further interest rate hikes expected and interest rates reaching a level to sustainably support long-term growth, Southeast Asia’s second-largest economy is expected to grow at 4.4% in 2023 instead of the previously estimated 3.8%.
Investors can look at iShares MSCI Thailand ETF (THD - Free Report) to gain exposure to the economy.
Vietnam
Boosted by rising industrial production, Vietnam's year-over-year GDP growth rate reached 5.3% in Q3. The country's medium and long-term growth outlook remains bright, driven by numerous factors that are set to sustain its rapid economic expansion.
With strong and sustained economic expansion anticipated over the next decade, according to S&P Global, Vietnam's total GDP is forecast to surge from $410 billion in 2022 to $750 billion by 2030.
Vietnam is set to emerge as one of Asia's fastest-growing economies, driven by lower manufacturing costs, a surge in capital expenditure, robust foreign direct investment, and expanding trade agreements like the Comprehensive Economic Partnership Agreement with the United States and the EU-Vietnam Free Trade Agreement.
However, there are some short-term headwinds engulfing the country. Being an export-heavy country, a slowdown in the economies of its major trading partners like the United States, China and the EU have resulted in the country’s export levels to slump.
Investors can look into fund like Global X MSCI Vietnam ETF (VNAM - Free Report) and VanEck Vietnam ETF (VNM - Free Report) to gain exposure to the country. These funds have added 13.45% and 14.44% year to date (as of Oct 11).
Investors can also look at Global X FTSE Southeast Asia ETF (ASEA - Free Report) to gain more diversification while investing in these countries. The fund has exposure to Indonesia (24.95%), Thailand (20.41%), Malaysia (14.34%) and the Philippines (2.91%) and has added about 10.51% over the past year (as of Oct 11).
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Tap Emerging Asia's Growth Potential With These ETFs
Emerging Asia, as per IMF, includes countries like China, India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam. With great growth potential in the medium to long term, investing in this group of nations can prove to be beneficial.
While several rating agencies have lowered the 2023 GDP growth forecasts for certain countries, their upward revisions for 2024 indicate promising investment opportunities in these nations.
Below, we highlight the funds with exposures to Indonesia, Malaysia, the Philippines, Thailand and Vietnam for investors to gain exposure and tap the growth potential of the emerging Asian countries. However, recent events like the Gaza militants' attack on Israel and declining exports due to the Chinese and the EU economic slowdown, have introduced volatility in the mentioned funds.
Indonesia
The largest economy in the Southeast region of Asia, Indonesia's robust growth is expected to persist until at least 2030. The country’s economic growth is fueled by the acceleration in household consumption by the growing middle class, constituting about half of Indonesia’s GDP, according to International Banker.
The surge in commodity prices for its primary export goods as well as an uptick in tourism levels, has prompted an upward revision in Indonesia's growth forecast for 2024, now projected at 5.1%, up from 2023’s estimate of 4.7%.
According to Reuters, in September, Indonesia's annual inflation rate eased to 2.28%, marking the lowest inflation rate recorded since February 2022, aligning closely with market expectations and approaching the lower threshold of Bank of Indonesia’s target range. Analysts are anticipating that the bank will maintain its rates at 5.75% for the ninth consecutive month, as per Reuters.
Funds like VanEck Indonesia Index ETF (IDX - Free Report) and iShares MSCI Indonesia ETF (EIDO - Free Report) can help gain exposure to the country.
Malaysia
According to the World Bank's latest report, as per The Star, Malaysia's economic growth for 2023 is forecast to moderate to 3.9%, down from the earlier projection of 4.3% in April, primarily attributed to a significant slowdown in external demand.
Despite concerns, the World Bank forecasts Malaysia's economy to grow by 4.3% in 2024, supported by a global economic rebound, higher oil prices, increased domestic demand, rising investments, tourism sector recovery, and easing inflation.
According to prime minister Anwar Ibrahim, as quoted on Reuters, the country is aiming to achieve private investment levels of about $64 billion annually as well as economic growth of 5% until 2025.
iShares MSCI Malaysia ETF (EWM - Free Report) is a pure-play Malaysia ETF and has gained about 2.86% over the past three months (as of Oct 10).
Philippines
According to Investing.com, underscoring the Philippines’s post-pandemic recovery, the International Monetary Fund downgraded the country’s GDP growth rate for 2023 to 5.3% from the previous estimate of 6.2%. Even after the downgrade, the Philippines’s economy is still expected to be one of the rapidly growing economies in Asia.
An expected boost in government spending and rising export demand are set to drive the Philippines's growth to 6% in 2024, as projected by the IMF. Strong domestic demand, led by private consumption and decreasing inflation, will further fuel the robust growth outlook.
Philippine Finance Secretary Benjamin Diokno, as quoted on Reuters, said that the country is putting an end to its hawkish stance, although the inflation levels still remain above the central bank’s benchmark levels. The country’s central bank, the Bangko Sentral ng Pilipinas, has kept the benchmark interest rate steady at 6.25% in its last four meetings.
Investors can look at iShares MSCI Philippines ETF (EPHE - Free Report) , which has gained about 11.30% over the past year (as of Oct 10).
Thailand
Rebounding tourism and growth in the private investment levels helped support the country’s GDP growth in 2023. Expected to maintain a steady growth rate over the next decade, Thailand’s economy is projected to increase to $860 billion by 2032.
Thailand's economy is poised to become one of the trillion-dollar economies in the Asia-Pacific region, driven by strong private consumption due to rising urban household incomes and sustained tourism from populous Asian emerging markets, according to S&P Global.
Headwinds resulted in Thailand’s central bank downgrading its growth forecasts for 2023 to 2.8% from the previously estimated 3.6%.
However, according to Reuters, with no further interest rate hikes expected and interest rates reaching a level to sustainably support long-term growth, Southeast Asia’s second-largest economy is expected to grow at 4.4% in 2023 instead of the previously estimated 3.8%.
Investors can look at iShares MSCI Thailand ETF (THD - Free Report) to gain exposure to the economy.
Vietnam
Boosted by rising industrial production, Vietnam's year-over-year GDP growth rate reached 5.3% in Q3. The country's medium and long-term growth outlook remains bright, driven by numerous factors that are set to sustain its rapid economic expansion.
With strong and sustained economic expansion anticipated over the next decade, according to S&P Global, Vietnam's total GDP is forecast to surge from $410 billion in 2022 to $750 billion by 2030.
Vietnam is set to emerge as one of Asia's fastest-growing economies, driven by lower manufacturing costs, a surge in capital expenditure, robust foreign direct investment, and expanding trade agreements like the Comprehensive Economic Partnership Agreement with the United States and the EU-Vietnam Free Trade Agreement.
However, there are some short-term headwinds engulfing the country. Being an export-heavy country, a slowdown in the economies of its major trading partners like the United States, China and the EU have resulted in the country’s export levels to slump.
Investors can look into fund like Global X MSCI Vietnam ETF (VNAM - Free Report) and VanEck Vietnam ETF (VNM - Free Report) to gain exposure to the country. These funds have added 13.45% and 14.44% year to date (as of Oct 11).
Investors can also look at Global X FTSE Southeast Asia ETF (ASEA - Free Report) to gain more diversification while investing in these countries. The fund has exposure to Indonesia (24.95%), Thailand (20.41%), Malaysia (14.34%) and the Philippines (2.91%) and has added about 10.51% over the past year (as of Oct 11).