Thai Bourse joins alliances to increase alternatives for investors

Thai Bourse joins alliances to increase alternatives for investors


The Stock Exchange of Thailand (SET) has increased investment alternatives for provident fund and Government Pension Fund (GPF) members through the program “Employee’s Choice.” The SET has signed a memorandum of understanding with the GPF and Association of Investment Management Companies (AIMC) to promote this program and build a long-term investment culture by encouraging the funds’ members to increase their financial sophistication and choose their own investment plans.

“One of the eight measures in the Thai Capital Market Development Plan is to promote a long-term investment culture through long-term savings. The program, ‘Employee’s Choice”, is important in achieving this goal, as provident funds and the GPF are existing long-term investment channels,” revealed SET President Charamporn Jotikasthira.

“One investment policy cannot optimally support employees of widely varying ages and needs. Thus, SET encourages employers having provident funds and GPF to offer multiple investment policies for their staff to choose from – such as ‘Employee’s Choice’,” he continued.

Employee’s Choice will help expand investor base through institutional investors and increase long-term savings in the economic system, helping build a large fund source for the capital market and build a sustainable economy. Over the past ten years, the GPF and provident funds have invested in equities at an average of 9-11% annually, which still has room to grow,” said Mr. Charamporn.

SET will encourage listed companies to set up provident funds incorporating “Employee’s Choice” for their employees. Moreover, SET will promote fundamental and technical investment knowledge through activities and media, e.g., SET in the City 2010, Money Channel, Money & Wealth, leaflets, and training courses for employers and employees.

“From July 2010 on, GPF members will be able to choose their own investment plan. There will be four alternatives: 1) A financial market plan, giving the lowest risk and investing in one-year bonds; 2) A bond market plan, investing in both short- and long- term bonds, seeking returns that are higher than bank savings deposits; 3) The main plan, which has not less than 60.00% of its investments in assets with low price volatility. GPF will apply this alternative for members who do not show their preference for a specific plan, and 4) An equity plan, which invests more in stocks, giving the highest potential for return but also the highest risk,” said GPF Secretary-General Sopawadee Lertmanaschai.

In addition, GPF will continually hold training courses on investment products, including in equities, bonds, mutual funds, and retirement plans. GPF will promote this idea through various media channels. Currently, GPF has over a million members nationwide, and as of March 2010, GPF has assets under management of THB347.00 billion (approx. USD10.84 billion), of which 10.71% is in equities.

“Helping the investing public access and understand the opportunities and risks of alternatives offered develops all parties involved. Thus, aside from promoting knowledge on savings plans, choosing investment tools and encouraging employers and employees to consider Employee’s Choice for their savings, the Association of Investment Management Companies (AIMC) will survey its members’ fund customers to find out their risk and return profiles and other investment-related information. All members will use the same core questions, so that responses can be combined to give a comprehensive, industry-wide picture of pension and provident fund clients,” AIMC President Vorawan Tarapoom noted.

“Employee’s Choice” has received great attention and has shown high growth. As of end-2009, a total of 1,317 employers had offered this program to their employees, accounting for 14.1% of total employers, a soar of 98% over the previous year. As of March 2010, there were over 10,000 employers, with 2.1 million employees who were members, with provident funds valued at THB512.00 billion (approx. USD16.00 billion) or 5.8% of gross domestic product (GDP), which is quite high. For the past ten year, provident fund grew consistently at 10%, invested in equities at an average of 9.5 % or THB35 billion (approx. USD1.09 billion) per year, added Ms. Vorawan.

The SET, GPF and AIMC will together promote “Employee’s Choice” through the campaign “Choose the right one”, using various activities and media. There will be seminars for members’ representatives and employers in September 2010 to encourage the use of “Employee’s Choice” in both the public and private sectors.