Fund inflows into extra units of the Super Savings Fund (SSF) are anticipated to have reached 10 billion baht before the one-time investment incentive lapsed yesterday, says the Association of Investment Management Companies (AIMC).
"Last Friday's total investment sum was nearly 7 billion baht and we hope it reached 10 billion baht by the end of June," said AIMC chairman Vasin Vanichvoranun. "The investment amount reflects the fund's investment conditions and market sentiment during the subscription period."
Total investment inflows into the extra SSF units totalled 1.5 billion baht in April, Morningstar Thailand reported. Slim inflows into the extra units of the SSF were due to lacklustre investment sentiment and the lock-up investment period.
The cabinet in March approved a raft of measures, including allowing investors to receive an additional tax privilege of 200,000 baht of annual income, separate from the tax-deductible amount applied to retirement-related funds, for SSF units in which 65% of net assets are invested in SET-listed securities.
Investors must have purchased these investment units between April 1 and June 30 and must hold them for at least 10 years.
The main objective of the one-time investment incentive was to shore up equity investment inflows in Thailand's stock market.
The SSF, approved by the cabinet in December 2019, is a new tax-saving fund meant to replace long-term equity funds (LTFs), whose tax incentive lapsed at the end of last year.
SSF investment conditions are more relaxed than those for LTFs, as SSF units can invest in any assets, while LTFs stipulate equities as the major investment asset.
Mr Vasin said the AIMC and other related organisations have asked the Federation of Thai Capital Market Organisations (Fetco) to appeal to the Finance Ministry to extend the investment period for the extra SSF units because Thailand's stock market has not recovered fully.
He declined to comment on Fetco's proposal to extend the investment period for the extra SSF units.
A capital market source, speaking on condition of anonymity, said the lock-up period and stock market conditions are key factors affecting investment incentives in the extra SSF units.
Separately, the market regulator is still in the process of setting up a high-yield bond fund to prevent a default in non-investment grade debentures.
Issuers may have difficulty rolling over such debentures because their business has been hurt by the coronavirus crisis.
"We are still studying the process, but only institutional investors and high-net-worth investors will be allowed to invest in this high-yield bond fund, with a tax incentive to attract investment inflows," said SEC secretary general Ruenvadee Suwanmongkol.
Based on the SEC's survey of high-yield bond issuers, they have no liquidity problems. Uncertainties, however, remain at large due to the pandemic, therefore the fund to support non-investment-grade debentures is needed, said Ms Ruenvadee.
The SEC and capital market representatives agreed to set up a high-yield bond fund to provide liquidity for non-investment-grade debenture issuers battered by the coronavirus crisis.
The fund initially will be established in the form of a mutual fund or a trust fund and classified as a closed-end fund managed by financial experts.
Investment is restricted to institutional investors and high-net-worth investors, with mechanisms in place to protect investors' benefits and risk acceptance levels.
The money used to set up the fund will come from interested parties.
The SEC is also concerned about the investment risk of perpetual bonds, given that several companies have issued this kind of bond, Ms Ruenvadee said.