THERE ARE SOME recent developments in Thailand that could make the country even more interesting to investors this year. Last year, Thailand was the market for equities, with the Stock Exchange of Thailand being the best performing Asian equity market (up 116.6 per cent) and the baht rising (up 8.7 per cent) against the US dollar.
This year, however, the investment story in Thailand might be corporate bonds. More than 30 blue-chip Thai companies are expected to have their corporate bonds listed and traded on the domestic market in the first quarter. The deepening of the domestic corporate bond market helps the government's objective of having not only quantity of growth but also quality of growth.
This is because corporate bonds provide added fuel for the already fast-growing economy while at the same time reducing the risks of overheating.
Corporate bonds offer companies and investors a less risky alternative to the stock market, better asset allocation, capital structures and, as an end result, better risk and capital raising diversification.
The Thai economy is expected to grow by more than 6 per cent this year, which would make it Asia's third-fastest growing economy after China and Vietnam. Private sector economists are more bullish, forecasting growth at between 6.4 per cent and 8 per cent.
Prime Minister Thaksin Shinawatra is even more ambitious and wants economic growth to reach 10 per cent next year. But without a liquid and well functioning bond market, this would probably lead to overheating of the economy and misallocation of capital.