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Thai Pension Funds

Thai Pension Funds. Pisit Leeahtam 8 November 2013. Past investment behaviors. Prior to 1997 crisis. Post 1997 crisis till 2012. FX was a scarce resource. The Central Bank was not open at the beginning to encourage portfolio investment abroad.

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Thai Pension Funds

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  1. Thai Pension Funds

    Pisit Leeahtam 8 November 2013
  2. Past investment behaviors Prior to 1997 crisis Post 1997 crisis till 2012 FX was a scarce resource. The Central Bank was not open at the beginning to encourage portfolio investment abroad. Baht appreciated from B55 per US$ at begin 1998 to B28 per US$ by Apr 2013. GDP growth over 7% per year Interest rates at bank deposits were at 12-15% per year. Blanket guarantee of bank deposits by the state. Equity and Debenture were not popularfor investors.

  3. Thai pension funds investment abroad has been limited

  4. 20% of Investment of GPF are abroad Gov bond Debenture Bric bond Equity Bric equity Real estate
  5. Investment of SSF at end Sep 2013 Mutual funds others Bank deposits Equity Debentures Gov Bonds SE bonds
  6. But the condition is changing International reserves rose from near zero in 1997 to the peak of US$181 billion by end 2012 and in 2013, the reserves declined to US$173 at end Oct 2013. The central bank has adopted a more liberal foreign exchange policy toward outward portfolio investments. Since the second half of 2013, the US dollar is strengthening while the baht is weakening as the current account balance shifts to deficits.
  7. Interest rates in the Thai capital market are in line with the international interest rates. Limited supply of capital market products. But demand for investable products are increasing as supply of saving funds increases. The Baht is reversing its trend in the past 15 years.
  8. Interest rates for deposits at banks Interest rates % Fixed 3 month Fix 12 month January 2012 December 2012 22 October 2013
  9. Yields of Thai government bonds
  10. Thai equity market has peaked in 1Q13 2005 2011 2012 2013 2006 2007 2008 2009 2010
  11. Baht has appreciated since 1998 Baht per $ Mar13 Mar13 Sep13 Sep13
  12. At present, Saving funds rose to over 20% of GDP Social Security Fund: $34 billion (end Sep 2013) Provident Fund: $23.5 billion (end Aug 2013) Government Employee Pension Fund: $14.2 billion (end Aug 2013) Private Fund $10 billion (end Aug 2013)

  13. More provident funds are offering options to members for investing abroad, i.e. 10% of their saving

  14. Appetite to invest abroad Limited supply in the local market Higher return/ capital gain abroad vs local FX opportunity, the exchange control regime is more supportive A need for diversification of portfolio investment “Employee Choice” :Members are given the choice to select. Investing in equity in Japan, USA will show better return in 2013 than investing in local market.

  15. This will attract more members to choose to invest abroad

  16. If the present pension funds that invest abroad rose to 25%, the amount will be US $20 billion.

    Social Security Fund: $34 billion (end Sep 2013) Provident Fund: $23.5 billion (end Aug 2013) Government Employee Pension Fund: $14.2 billion (end Aug 2013) Private Fund $10 billion (end Aug 2013)

  17. Pisitleeahtam@gmail.com

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