GPF hopes to raise ceiling for investment in foreign assets

“We believe that overall, investment in foreign markets has provided a good return and it could spread out risk, since other countries’ economies expand and contract at different times from Thailand.  This gives us the ability to manage our risk better and keep investment volatility at a minimum,” Yingyong Nilasena, deputy secretary-general of the GPF, said yesterday. 

Last year it almost hit the ceiling at 24.5 per cent, and greater offshore exposure would also diversify risk away from a domestic economic slowdown.

“Our return on investment has been swinging, and if we were more flexible it would make us better able to manage risk. 

“For example, the reason we almost hit the ceiling in terms of investments in foreign stocks in 2013 was that there were better yields outside compared with Thai stocks [as the SET Index dipped].

“And this year we came back to overweight Thai stocks because they have returned to the positive region, as seen in the 20-per-cent surge in the SET Index,” he said.  

The GPF is discussing the idea with the Finance Ministry and it could happen next year if it gets Cabinet approval. After reaching 30-per-cent weighting, the fund would assess the global market situation before considering another increase.

The GPF normally prefers long-term investment. It holds stocks in Japan, the United States and Europe because their companies’ performances and returns on investment are reasonable.

It is looking to increase stakes in foreign stocks and funds that have higher returns than bonds, but not in China, since its government has imposed a quota and there are higher risks there. “The economic recovery of the European Union is gradual but the performances of private companies there are relatively reasonable, and it is still an attractive market for investment in stocks, while EU interest rates will remain low for quite some time,” Yingyong said. 

In terms of Thai stocks, GPF is interested in banking and real estate. It is still overweight in Thai stocks because of the recovery of the country’s economy and the expected revival of consumption next year. It has earned more than 5 per cent on its domestic stock portfolio year to date. 

Thai stocks are 11 per cent and foreign stocks 24 per cent, which together are within the agency’s 35-per-cent policy limit for investment in stocks. About 63-64 per cent of its assets under management are in Thai and foreign bonds and the rest in real estate and infrastructure.