Thailand's Hopes Rest on Tech Stocks: Passing the Baton from Autos and Tourism
[Series] The Frontline of Asian Stock Investment, Part 5
Tokio Marine Asset Management
Senior Fund Manager Hironori Akisawa
This time, we will focus on Thailand. Known as the "Land of Smiles," it is one of the world's leading tourism nations, attracting many visitors not only from Japan but from all over the globe. At the same time, it is an industrial nation where manufacturing developed early on, and it is particularly known for its thriving automotive production. Let's take a look at Thailand while incorporating local information.
To describe the Thai economy in a word, it can be said to have a structure with a high dependency on industry (manufacturing) and tourism. The contribution of industry (manufacturing) to GDP per capita is said to be around 30%, which exceeds Japan's 20% and is at a level comparable to China's nearly 30%. Furthermore, the dependency on tourism as a share of GDP is said to be in the mid-to-high teens, which is high even by global standards.
Among the manufacturing sectors, the most important are, as expected, electrical and electronic equipment and automobiles.
In particular, exports of electrical and electronic equipment have been growing, fueled by recent digital demand. Starting with the manufacturing of home appliances and precision equipment, it was once famous as a global production hub for hard disk drives (HDD). With the tailwind of "China Plus One," the production capacity for printed circuit boards (PCB) has expanded. In recent years, following the growth in AI-related demand, the production of electronic components for servers and data centers has been expanding rapidly.
Automotive sales and production are sluggish
Automotive production is also a very important industry for Thailand.
Thailand was once called the "Detroit of the East" and was a leading production hub in Southeast Asia. It has continued to produce around 1 million units annually for overseas markets, exceeding domestic sales, but in recent years, production volume has been declining along with the slump in domestic sales (Figure).
Following the automotive purchase support policy, which was a stimulus measure after the economic downturn caused by the 2011 flood damage, record-high sales were recorded in 2012. Production volume also rose to nearly 2.5 million units. However, due to the impact of a strong baht and sluggish domestic sales, production volume in 2025 remains at a level below 1.5 million units.
By the way, Detroit, a city in the U.S. state of Michigan, was once a "Motor City" where the U.S. Big Three (GM, Ford, Chrysler) had their headquarters, but it faced bankruptcy in 2013 following the decline of the U.S. auto industry. Currently, it is shifting toward new industries such as the manufacturing of electric vehicles (EVs) and robots, and the city is attempting a comeback.
The Thai four-wheeler market was once almost entirely occupied by Japanese manufacturers, a situation that could be called a paradise for Japanese cars, but the share of Japanese manufacturers in sales is gradually declining.
The background to this is the EV offensive by Chinese manufacturers, led by BYD. As of 2010, the sales share of Japanese manufacturers was about 90%, but in 2025, it fell below 70%. On the other hand, the share of Chinese companies has already exceeded 20%. This is not limited to Thailand; a similar situation is occurring in neighboring Malaysia and Indonesia, where Japanese manufacturers previously held a high share, just as they did in Thailand.
Chinese tourist numbers continue to decline due to a strong baht and a weak yen
The tourism industry remains a major industry in Thailand, but its recovery from the COVID-19 pandemic continues to be slow.
In 2019, before the pandemic, the number of tourists visiting Thailand reached a record high of approximately 40 million. Of those, Chinese tourists accounted for over 10 million. After the pandemic, although the number of tourists recovered to 35 million in 2024, the proportion accounted for by Chinese people fell below 20%, and the total number has decreased by the amount that Chinese visitors have declined.
Entering 2025, an incident occurred in which a Chinese actor kidnapped in Thailand was taken to Myanmar (*), which significantly shook trust in Thailand's public safety. As a result, the number of Chinese tourists visiting Thailand in 2025 decreased by more than 30% compared to the previous year, which was a major blow to Thailand's tourism industry.
* "Human Trafficking Casts a Shadow Over Thai Tourism; Instability in Myanmar as Background"
NNA POWER ASIA, January 21, 2025
It can be said that the impact of the weak yen is also in the background.
While there has been talk of a strong US dollar in foreign exchange markets recently, the Thai baht has been relatively strong even against the US dollar, and has moved in the exact opposite direction to the yen, especially since 2022. As a result, while the Japanese yen weakened to over 150 yen per US dollar, the Thai baht actually strengthened, leading to a trend where Chinese tourists shifted from the strong-baht Thailand to the weak-yen Japan.
When viewed against the yen, this trend is even more pronounced; from a level below 2.5 yen per baht at the end of 2011, the yen weakened to nearly 5 yen per baht by the end of 2025.
A strong currency is also a negative for Thailand as a manufacturing base. Since it means that costs rise relatively, it lacks the incentive for manufacturers to actively produce in Thailand.
In Thai consumption as well, the contribution from tourists accounts for a weight that cannot be ignored.
The proportion of foreigners (not limited to tourists) in the number of customers is said to reach 20-30% in urban areas, and since the consumption amount per person is also high, it is estimated that about 30% of consumption in major cities is by tourists.
The decline in consumption, mainly due to the decrease in Chinese tourists, has consequently become a factor in the delayed recovery of the Thai economy, and with the sluggishness of the automotive industry, the Thai economy remains at a low economic growth rate even within Southeast Asia.
Bull market after the February general election
Let's look at the Thai stock market here. The Thai stock market had been noticeably lagging behind other Southeast Asian markets, but since the beginning of 2026, there has been a notable rise around the time of the House of Representatives general election held in February.
Looking at the performance trend starting from April 4, 2025, the Stock Exchange of Thailand (SET) composite stock price index, "SET Index", showed an increase of over 30%. Among them, shares of Delta Electronics (Thailand), which handles electronic component manufacturing, rose significantly. Conversely, the commercial sector, which is dominated by domestic demand stocks centered on consumption-related stocks, noticeably lagged behind.
Delta Electronics (Thailand) is a manufacturing subsidiary of Taiwan's Delta Electronics, and the stock prices of both companies show similar movements. Against the backdrop of the recent strength in AI-related demand, Delta Electronics' orders have been growing steadily, and at the same time, Delta Electronics (Thailand)'s performance is also on an upward trend.
Regardless of the weakness of the Thai economy, it has attracted investor interest as a rare Thai stock that can enjoy the strength of global AI demand. Following its recent strong performance, it has become the largest company by market capitalization in the Thai stock market.
For Delta Electronics, Thailand is also a valuable production base, and it currently has the second-largest production capacity after China. The policy is to expand manufacturing capacity in Thailand and India in the future.
"Thailand 4.0" to cultivate the high-tech industry
I will also touch upon the economic aspects and industrial promotion policies.
Thailand achieved industrialization relatively early by actively accepting foreign investment, but its economic growth rate has been sluggish in recent years.The "middle-income trap" is a term often used to describe the situation the country has fallen into. To break through this, the Thai government launched a 20-year long-term economic development strategy in 2015 called"Thailand 4.0."
"Thailand 4.0" aims to transform the economy into an innovation-driven, high-value-added model.
Based on the view that the growth model relying on cheap labor led by foreign investment has reached its limits, ten priority sectors have been designated for development. The goal is to realize the cultivation of these high-tech industries in a region consisting of three provinces in eastern Bangkok called the"Eastern Economic Corridor (EEC)." Although there were interruptions due to the COVID-19 pandemic, large-scale infrastructure development is underway, and investment incentives have also been introduced.
The ten priority sectors include next-generation automobiles, smart electronics, high-value-added tourism, smart agriculture and biotechnology, industrial robotics, the digital industry, and advanced medical services. These are areas that I, as an investor in Southeast Asian stocks, am also paying close attention to, and I would like to touch upon their progress on another occasion.
[Column] The History of Thailand
Many people may have a gentle impression of Thailand, known as the "Land of Smiles," but it is also a country where the political system changes frequently due to repeated military coups. Let's briefly look back at Thailand's history since the beginning of the 21st century.
The Birth of the Thaksin Administration and the "Middle-Income Trap"
In 2001, businessman-turned-politician Thaksin Shinawatra took office as Prime Minister. This brought a major turning point to Thai politics.
He appealed for "reducing inequality" and garnered strong support from the poor in rural and urban areas. Because economic disparity had widened after the period of high growth, dissatisfaction with the city center and the ruling class had accumulated. While he played a role in encouraging mass political participation, his confrontation with the existing power structure deepened, and he was ousted from politics and forced into exile following a military coup in 2006.
Afterward, the conflict between pro-Thaksin and anti-Thaksin factions continued, and public safety deteriorated due to political demonstrations, but in 2011, Thaksin's younger sister, Yingluck Shinawatra, became Prime Minister. However, she too was ousted from the Prime Minister's seat in the 2014 military coup, and a military-led government was born once again.
The Rise of the Royal Reformists
Entering the 2020s, large-scale democratization and anti-government demonstrations led by young people occurred frequently, developing into protest movements that mentioned royal reform. It has been said that respect for the royal family is high in Thailand, but since the passing of Rama IX (King Bhumibol Adulyadej), who boasted immense popularity among the people, and the succession to the current monarch, Rama X, voices of dissatisfaction with the royal family began to be heard, mainly among the younger generation.
In the 2023 general election for the House of Representatives, the reformist "Move Forward Party," which called for royal reform, gained support and became the largest party, but it could not secure the majority of votes necessary to nominate a Prime Minister. A coalition government centered on the second-largest party, the pro-Thaksin "Pheu Thai Party," was formed.
After two changes of Prime Minister due to unconstitutional rulings by the Constitutional Court, which is considered close to the military, the government shifted to a coalition led by the "Bhumjaithai Party" in 2025 (this series of movements is also called a "judicial coup").
In the House of Representatives general election held in February 2026, the "People's Party," the successor to the "Move Forward Party," had to settle for the position of the second-largest party, and with the "Bhumjaithai Party," which had been a minority ruling party, becoming the largest party, the confusion caused by the unstable political system seems to have subsided for the time being.
However, it is unclear whether the conflict between the movements toward democratization and expectations for reform, which have been repeated many times since the beginning of the 21st century, and the power structure trying to contain them will subside.
Hironori Akizawa
Tokio Marine Asset Management Co., Ltd.
Senior Fund Manager, Equity Investment Department
Graduated from the Faculty of Engineering, The University of Tokyo, and completed the Graduate School of Economics at the same university. After working at Daiwa Institute of Research, joined Tokio Marine Asset Management Co., Ltd. in 2008. Built a career in corporate research and equity investment in the Equity Investment Department. Well-versed in the IT sector. Stationed in Singapore from 2021 to 2025, serving as CIO of Tokio Marine Asset Management International. In current position since January 2026.
Company Overview
As the core asset management company of the Tokio Marine Group, it develops an "investment trust business" mainly for individual investor clients and an "investment advisory business" for institutional investor clients. Assets under management are approximately 9 trillion yen (as of the end of March 2025).
[Series Back Issues]
■5 Thailand's Hopes Rest on Tech Stocks: Passing the Baton from Autos and Tourism
(Extra Edition: 4 Classic Thai Tourism Spots - Relaxing in Krabi
■4 Vietnam's Rapid Advance (Part 1): VinGroup Stock Price Soars
Vietnam's Rapid Advance (Part 2): 'Doi Moi 2.0' Cultivating Domestic Demand
Vietnam's Rapid Advance (Extra Edition): The 'Now' of Various Regions Seen Through Street Walks
■3 The Indian Economy is a Star of Hope (Part 1): Automotive Sector Stocks are Booming
The Indian Economy is a Star of Hope (Part 2): iPhone Production Explodes as it Moves Out of China
The Indian Economy is a Star of Hope (Extra Edition): Where to Eat and Stay!
■2 The Impact of Chinese AI (Part 1): Companies and Products
The Impact of Chinese AI (Part 2): On-Site Visit Edition
■1 Moving Out of China Due to Trump Tariffs: Supply Chains at a Crossroads
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