Three capital market organisations will meet on Tuesday to reach a final conclusion on the tax-deductible funds they want to propose to the Finance Ministry, hoping to revive investments in good fundamental stocks in the Thai stock market.
The Federation of Thai Capital Market Organizations (Fetco), the Association of Investment Management Companies (AIMC) and the Securities and Exchange Commission (SEC) are set to finalise the details of the package for the ministry's consideration, especially investment conditions for long-term equity funds (LTFs).
Finance Minister Pichai Chunhavajira said last week that reintroducing LTFs, which expired in 2019, will help lift the Stock Exchange of Thailand's (SET) market capitalisation, and guidelines for reviving LTFs have already been proposed to the Revenue Department for consideration.
Tax-deductible funds will be one of the tools that help the Thai capital market attract more institutional investors. In addition to the capital market and the mutual fund industry, positive development of such funds would give a clear signal that the government is striving to stimulate the economy in every dimension, said AIMC's chairwoman Chavinda Hanratanakool.
Once the final conclusion is reached, the associations will present it to the Finance Ministry for its consideration, she said, adding that Fetco and the AIMC hope their proposal will be implemented this year, she added.
According to Mrs Chavinda, the Thai stock market is under many pressures, with a continuous sell-off by foreign investors causing the index to fall below 1,400-points. The AIMC believes that if there are measures to stimulate the economy and investment, the Thai stock market will recover once again.
"Investors have increasingly shifted their focus to overseas to diversify investment risks, especially in high-growth markets. Thailand, however, still has the opportunity to grow if there are good helpers and we want the capital market to help stimulate the overall economy," she noted.
Asia Plus Securities (ASPS) said that amid the recovery of listed Thai companies' earnings and the recovering economy, the stock market still needs tax-saving LTFs to make trading more robust.
First-quarter earnings mainly rebounded to a better degree than expected, and 2024 market earnings are projected to grow by over 10%. However, the SET has still been sluggish year-to-date, the average trading value is still thin and has been insignificant compared with market capitalisation of 17 trillion baht.
This is a good time to accumulate if tax-saving LTF incentives return, said the brokerage.