Investing in the Thailand market through Singapore Depository Receipts (SDRs) June 14, 2023
Thailand has experienced significant growth and development over the years. With a diverse range of industries and a strong emphasis on exports, Thailand has emerged as one of the leading economies in the region. Thailand’s economy is classified as an emerging market and is considered the second-largest economy in Southeast Asia, after Indonesia. The country has undergone a transformation from being an agrarian-based economy to a more industrialised and service-oriented one. The major sectors driving Thailand’s economic growth include agriculture, manufacturing, tourism, and services.
The Thai economy has shown increased growth momentum in 2023, with a year-on-year GDP growth rate of 2.6% in the first quarter, a significant improvement compared to the previous quarter. The growth was driven by a rapid expansion in private consumption, which increased 5.4% year-on-year. The surge in international tourism arrivals contributed to an 11.1% increase in expenditure on services, particularly in the hotels and restaurants sector. However, private and public investments experienced more modest growth rates.
In 2022, Thailand’s economic growth rate was relatively moderate as compared to other major ASEAN economies. Real GDP grew by 2.6% in 2022, indicating a modest pace of recovery from the pandemic-induced recession. The improvement in economic growth was driven by the recovery of private consumption and investment, while public investment contracted.
The increase in private consumption and investment, along with rising energy import prices, led to a significant rise in imports by 15.3% in 2022. On the other hand, exports experienced a more modest increase of 5.5% in USD terms.
Source: World Bank
Prior to the COVID-19 pandemic, international tourism played a significant role in Thailand’s GDP, contributing about 11.5% in 2019. However, the pandemic resulted in a sharp decline in foreign tourist visits, as international borders, including those of Thailand, were closed in April 2020. In 2022, as COVID-19 restrictions were gradually eased, international tourism began to recover, with 11.15 million arrivals as compared to just 430,000 in 2021. Nonetheless, this was still considerably lower than the peak of 39.8 million visits in 2019.
In the first quarter of 2023, there was a significant surge in international tourism, with 6.5 million visitors, which accounted for over half of the total international tourist visits in 2022. Tourism receipts for both domestic and international spending in the first quarter reached 499 billion THB, a substantial increase of 127% year-on-year.
The Tourism Authority of Thailand has set a higher target of 25 million international tourism visits for 2023, more than double the number of arrivals in 2022. This suggests the potential for further rapid growth in the tourism sector in the coming year.
Source: Thai Ministry of Tourism
Recently, Thai voters voted for the two main opposition parties. The result leaves the progressive Move Forward Party (MFP) seeking to form a coalition government with Pheu Thai and five other parties.
But in a kingdom with a long history of coups – at a least a dozen – and judicial intervention in politics, the road to power is not certain. Furthermore, another military intervention is not seen as likely.
From the above, you can see that the Thai market offers Singapore investors an opportunity to profit from the country’s growth.
If you wish to invest in top Thai companies, Singapore Depository Receipts (stock code: TPED), or SDRs, listed on SGX, offer investors an attractive combination of stability, liquidity, and convenience. As a listed security on the Singapore Exchange, SDRs provide easy access and liquidity to investors seeking exposure to these companies without the need to deal with the complexities and costs associated with purchasing shares directly in Thailand.
- Convenience: Trade in a single marketplace during the Singapore market hours and trading days. SDRs are traded and settled in Singapore Dollars, providing certainty and transparency in execution prices.
- Cost simplification: SDRs are traded in Singapore Dollars (local brokerage and exchange fee applies, with no FX charges).
- CDP custody: SDRs are custodised with CDP, hence investors will be able to view their aggregated holdings, including other SGX listed securities, via the SGX investor portal.
In addition, the Singapore market opens earlier than the Thai market, and allows SGX to be the venue of choice for price discovery whenever there are corporate announcements related to these companies, before the Thai market opens at 11.30am (Singapore time).
Currently, the SDRs offer exposure to three Thai companies – PTTEP; AOT; and CP All.
PTT Exploration and Production Public Company Limited, or PTTEP, conducts businesses in petroleum exploration, development, and production to support Thailand’s energy security and the energy demand of countries they operate in. As of 1Q2023, the net profit increased by 36% from USD417 million to USD569 million. Net profit was largely impacted by key project completions, acquisitions, and divestments. 
The Airport Authority of Thailand, or AOT, is one of the largest airport operators in the Asia-Pacific region, with a proven reputation for delivering high-quality, reliable services to travellers. For the past two quarters, the air traffic volume of the six airports under AOT’s responsibility increased 91.06% or 314,083 flights as compared to the prior year’s, this result corresponds with the full re-opening of the country for travel. 
CP All Public Co. Ltd., or CP All, engages in the largest convenience store chain operations under the 7-Eleven trademark in Thailand, operating over 11,000 7-Eleven stores throughout the country. As of 2022, the company recently opened 702 new 7-Eleven stores both in Bangkok and provincial areas of Thailand, meeting their target expansion plans despite pandemic concerns. 
-  https://www.worldbank.org/en/country/thailand/overview#:~:text=According%20to%20the%20Thailand%20Economic,2022%20and%203.6%25%20in%202023
-  https://www.spglobal.com/marketintelligence/en/mi/research-analysis/thailands-economy-rebounds-in-early-2023-as-tourism-surges-may23.html
-  https://www.adb.org/sites/default/files/linked-documents/tha-cps-2021-2025-ld01.pdf#:~:text=Thailand%20experienced%20severe%20droughts%2C%20subdued%20exports%2C%20political%20unrest%2C,enabled%20moderate%20economic%20expansion%2C%20averaging%203%25%20during%202013%E2%80%932019
-  https://gulfnews.com/world/asia/what-next-for-thailand-after-election-rejects-military-rule-1.95772055
-  https://www.pttep.com/en/Investorrelations.aspx
-  https://investor.airportthai.co.th/
-  https://www.cpall.co.th/en/investor
About the author
Elston Soares and Marcus Yeo
Elston Soares is an editor with Phillip Securities Research. Marcus Yeo, an intern with PSR, also contributed to this article.