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In a difficult economic context, the Thailand is deploying a bold initiative by setting up a long-term investment fund intended to revitalize its stock market. Announced by the Minister of Finance, this project aims to offer support to investors while granting them tax advantages. As the local market faces increasing challenges, this strategy could prove crucial in stabilizing sales of long term fund and encourage investors to maintain their holdings.
The Thai government, faced with a disappointing performance of its stock market since the start of the year, announced the creation of a long term equity funds. This fund aims to support the Thai stock market, particularly affected by a series of massive sales of long-term funds. This initiative, discussed by Finance Minister Pichai Chunhavajira, is planned to provide tax benefits to investors and add stability to the market.
Support needed for the Thai stock market
The Thai stock market recorded a decline of approximately 9% since the start of the year, becoming the worst performing market in Asia. This alarming situation has pushed the government to consider solutions to revitalize the financial sector. The long-term investment fund is seen as a direct response to the difficulties encountered by the market, offering an alternative to potential investors, in order to encourage them to maintain their capital over the long term.
An innovative legal structure with an ESG fund
The new fund could be integrated into an existing system of social and environmental governance (ESG). This would not only finance sustainable projects, but also attract investors sensitive to environmental and social issues. By offering tax benefits for a period of five years, the government hopes to create an environment conducive to investment, while supporting initiatives that respond to current societal challenges.
Sales anticipation and market stability
Pichai Chunhavajira pointed out that the fund could help slow long-term fund sales, which are putting considerable pressure on the market. By providing a safe haven for investments, investors could reconsider their selling decisions when considering the tax benefits and other incentives associated with the fund. This mechanism is essential to restore confidence to market players wishing to preserve their capital in an unstable economic climate.
Market data and future outlook
Currently, approximately 188 billion baht (or $5.52 billion) of long-term fund shares are likely to be redeemed. This figure indicates a capital flight which could be stopped thanks to the introduction of the new fund. Indicators also show that the main stock index has seen a recent slight rise of 0.48%, a timid sign of a possible recovery.
Global context and investment opportunities
Thailand remains an attractive destination for foreign investors due to the favorable policies implemented by the Board of Investment (BOI). These incentives, combined with initiatives like the long-term investment fund, position the country as a hub for investment in Southeast Asia. The Thai government continues to increase its efforts to integrate sustainable development strategies while promising investment-friendly governance.
Growth prospects
The establishment of this long-term investment fund could also coincide with a renewed interest in the Thai market. With investment demands expected to continue to increase, particularly due to ambitious electric vehicle production plans under the “30@30” initiative, investors can find real opportunities within the Thai market. In summary, this proactive response could well be the first step towards a lasting and necessary revitalization of the financial market, while laying the foundations for a more resilient and diversified economy.
- Objective : Supporting Thailand’s struggling stock market.
- Fund type: Long-term equity funds.
- Announcement : Statement by the Minister of Finance, Pichai Chunhavajira.
- Walk : Thai stock market, the worst performing in Asia in 2023.
- Tax advantages: Similar benefits for investors for five years.
- Expected impact: Slow down long-term fund sales, reduce market pressure.
- Forecast: Fund details to be announced soon.
- Clues: Although the main index rose by 0.48%, it fell by around 9% in 2023.
- Potential amount: Around 188 billion baht of long-term fund shares available.
Thailand Long Term Investment Fund FAQ
What is the objective of long-term investment fund in Thailand? The fund aims to support and revitalize the Thai stock market, which has been the worst performing in Asia this year.
Who announced the creation of this fund? Thai Finance Minister Pichai Chunhavajira said on Tuesday the government was considering the move.
How will the fund be structured? The fund could be created within an existing fund focused on social and environmental governance, also known by the acronym ESG.
What tax benefits can investors expect? Investors will benefit from similar tax benefits for a period of five years.
What impact is the fund expected to have on fund sales in the long term? It should help slow sales of long-term funds, which are currently putting pressure on the market.
How has the stock index performed recently? The stock index increased by 0.48% Tuesday, but still recorded a drop of approximately 9% since the start of the year.
What does the amount of 188 billion baht represent in relation to the market? This amount corresponds to the long-term fund units that can currently be redeemed.