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4 ETFs in Singapore’s Market That Are Exposed to ASEAN’s Growing Economy

The flags of ASEAN nations raised in MH Thamrin Avenue, Jakarta, during 18th ASEAN Summit, Jakarta, 8 May 2011.

ASEAN is the Association of Southeast Asian Nations. Established in 1967, its aims include the acceleration of economic growth and cultural development of its members. Today, ASEAN has 10 members, namely, Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

According to a report by business consulting firm McKinsey, ASEAN, was the seventh largest economy in the world in 2013 with a combined GDP (gross domestic product) of US$2.4 trillion. It is projected to grow to be the fourth largest economy in the world by 2050.

That’s not all when it comes to ASEAN’s economy.

asean-economy-kai-kiat
Source: McKinsey

The chart just above show that from 2000 to 2013, ASEAN had low GDP growth volatility. Meanwhile, its real GDP growth rate over the same period was also impressive at 5.1%. In 2013, ASEAN also had a low debt to GDP ratio of just 47%.

McKinsey’s report stated that ASEAN’s growth would be backed by a combination of labour force expansion and productivity growth. ASEAN’s workforce is young and large – it is already the third largest behind China and India.

The 1997 Asian Financial Crisis had decimated the economies of some ASEAN members. But, the region had managed to weather the 2007-09 Global Financial Crisis well, according to the McKinsey report.

The report also shared that ASEAN households with annual income of over US$7,500 is expected to increase from 67 million in 2010 to 125 million in 2025. Households with annual income of more than US$7,500 are classified as the “consuming class.”

At this point, some of you might be wondering which countries are the largest economies in ASEAN. Indonesia holds pole position, followed by Thailand, Malaysia, Singapore, and the Philippines.

Singapore’s stock market have exchange-traded funds (ETFs) that track the stock market indices of some of those large ASEAN economies and ASEAN itself. Some examples include the Lyxor ETF MSCI Indonesia (SGX: P2Q), the Lyxor ETF MSCI Malaysia (SGX: G1M), the db x-trackers MSCI Philippines IM Index UCITS ETF (SGX: N2E), and the CIMB FTSE ASEAN40 ETF (SGX: M62).

etf-table-kai-kiat
Source: SGX

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore contributor Ong Kai Kiat doesn’t own shares in any companies mentioned.