SSO to increase its position in equities, foreign assets
AFTER earning Bt10.03 billion from its foreign investments since 2002, the Social Security Office (SSO) wants to increase its position in equities and foreign assets to seek an even bigger return, which could allow the fund to expand social welfare benefi
“We are asking the Finance Ministry to increase our investment ceiling in Thai and foreign equities, as the low interest rate environment globally and domestically means that the return from equities is more attractive,” Win Phromphaet, head of investment at the SSO, said last week.
The Social Security Fund (SSF) counted Bt1.25 trillion in assets at the end of last year.
The SSO has been holding foreign assets, of which 90 per cent was in bonds and 10 per cent in equities, since 2002. Its foreign investment budget has grown from about Bt2 billion to Bt28.1 billion, or 2.8 per cent of the SSF’s assets.
The SSF’s foreign investments were Bt36.94 billion as of May 31. The SSO has already cashed in Bt1.19 billion from the Bt10.03 billion, leaving Bt8.84 billion unclaimed.
The SSO wants to increase the ceiling for Thai equities from 9 per cent to 12 per cent. There is Bt3 billion left in the quota for foreign equities.
The return on SSF’s foreign bonds was 5.2 per cent from a budget of Bt32.3 billion while the return on foreign equities was 11.3 per cent from a budget of Bt4.6 billion since 2002.
The SSO is investing 68.0 per cent or Bt871.74 billion of its assets in bonds, mostly government bonds, 8.9 per cent in common stocks spread throughout all industries, 7.6 per cent in state-owned enterprise bonds, 4.9 per cent in other bonds, 4.2 per cent in property and foreign funds, 3.8 per cent in debentures and 2.6 per cent in savings.
“Our aim is to increase the foreign investment ratio from 3 per cent to 30 per cent, but this would be a gradual development,” he said.
Amnaj Rajitganok, equity fund manager, said when the Stock Exchange of Thailand (SET) is down, the SSO will buy Thai equities in any sector that it expects to do well in the long run.
He expects the SET Index to improve along with market sentiment in the second half of this year, but it will be fluctuating in the range of 1,400-1,650 points.
The tourism industry will contribute to the recovery of the economy, making up for poor exports.
“The organisation has been collecting Thai assets since the beginning of this year because the prices of stocks have dropped to the point that they are lower than their intrinsic value,” he said.
“The organisation chose to invest in companies with outstanding cash flows and high dividends,” he said.
The real estate, banking, energy, hospital and restaurant industries will have good revenues and give high dividends at the end of the year, but the market will start to outperform after the beginning of next year, he added.
