ETFs With Thai Exposure Next Up On Election Hit Parade?

For those that weren't believers in the impact elections can have on the near-term fortunes of emerging markets ETFs, they should be converted now after witnessing the price action in the iShares MSCI All Peru Capped Index Fund EPU following that country's recent presidential election. Fortunately or unfortunately, political theater for emerging markets ETFs didn't end with Peru's election. Another rapidly growing and politically volatile nation heads to the polls in July, that being Thailand. As we noted last year, the iShares MSCI Thailand Investable Market Index Fund THD was deeply impacted by political protests between the Red Shirts and Yellow Shirts in the Southeast Asian nation in 2010. This may be over-simplifying things, but any day in which there was no news or good news on the protest front was a good one for THD in the latter half of 2010. Well, political concerns are back in Bangkok as Thai stocks have slid 7% since early May as worries over intensified political instability have heightened ahead of the July 3 elections. For now, it appears the market would prefer Yingluck Shinawatra, the sister of former premier Thaksin Shinawatra, win in July. For those that want to see Thai stocks rally again, here's to hoping Thailand does what Peru didn't and that's elect the preferred candidate. And here are the ETFs to watch ahead of the Thai elections. 1) iShares MSCI Thailand Investable Market Index Fund THD: Obviously. Financials and energy names have been identified as two groups that will be in play on the election results and possible winners if Shinawatra emerges victorious. Those two groups combine for over 64% of THD's weight. If THD finds support at $62, it could bounce. If not, downside risk is to $58, but even with that, buying THD here could put traders in position for a bounce back to the 70s, so the risk/reward is favorable. 2) WisdomTree Emerging Markets Small-Cap Dividend ETF DGS: Like THD, DGS was an EM star in 2010 turned laggard in recent months and since this is a multi-country ETF, there are more issues than just Thailand at play here. Still, Thailand accounts for 9.5% of DGS's weight and that might be enough for the election to have some effect on this ETF. 3) Global X FTSE ASEAN 40 ETF ASEA: ASEA still isn't even four months old, but we'll get to see how politics effect this ETF before it celebrates its fifth month of trading as Thailand accounts for over 11.5% of ASEA's weight. ASEA's exposure to Thailand is significant in terms of the election because the ASEAN nations are moving toward a joint trading zone in 2015 and are working cooperatively to boost international trade with industrialized nations. In other words, a pro-business candidate (Shinawatra) winning on July 3 in Thailand could mean a boost for ASEA. 4) EGShares Emerging Markets Energy ETF EEO: We've previously noted that EEO has a decidedly Russian bent to its country weights, but Thailand is the ETF's third-largest country allocation at 10.2% and that's enough to make EEO one to watch in late June/early July.