Stock analysts are throwing their support behind the Finance Ministry's plan to set up a new fund to invest in Thai shares, saying it could increase trading in the fourth quarter.
As a measure to boost the bearish stock market, Finance Minister Pichai Chunhavajira said the ministry is studying the possibility of creating a new fund resembling the Vayupak Fund, a previous state-controlled investment fund that invested in Thai shares with solid fundamentals.
Two funds would be established with a total value of 500 billion baht, of which 150 billion baht would be offered to the public, he said.
Details of the plan would be finalised by the third quarter of this year, said Mr Pichai.
In parallel, he said the conditions of Thai ESG (environmental, social and governance) funds would be revised to raise tax incentives to a maximum of 300,000 baht, up from 100,000 baht, while the holding period would be shortened to five years from eight years.
"The Vayupak-style fund could stimulate the demand side of the stock market starting from the fourth quarter this year," said Veeravat Virochpoka, head of research at FSS International Investment Advisory Securities.
Every 10 billion baht of investment in the fund could increase the Stock Exchange of Thailand (SET) index by 20-30 points, he said.
Asia Plus Securities (ASPS) said the revised Thai ESG fund could attract 60-70 billion baht worth of investment to the SET each year, particularly from institutional investors.
"This year, institutional investors' net purchases of Thai shares are very small at only 4.8 billion baht year to date, as they are holding cash of almost 10%," the brokerage said in a research note.
The research department at ASPS believes a revised Thai ESG fund should encourage institutional investors to add money to the portfolio for window dressing during mid-year.
"There is a chance Thai ESG funds could attract investments of 60-70 billion baht per year to the SET after the revision. Every 10 billion baht in investment usually supports the SET index moving up by 1-2%," ASPS noted.
"The Thai ESG measures come at the right time because the SET index has a very interesting valuation. However, tax-deductible funds are usually active in the fourth quarter.
"An amendment of measures now may support the market at a time when it is weak."
