The Finance Ministry plans to complete a proposal within two weeks to establish a new fund resembling the Vayupak Fund, a previous state-controlled investment fund that focused on Thai shares with solid fundamentals.
The new fund is expected to draw a minimum of 100 billion baht into the capital market, said finance permanent secretary Lavaron Sangsnit, with two options for the new fund.
One option is to create a new, third fund.
Currently there are two Vayupak funds: Fund Type A, which allows the public to purchase investment units and has a value of 150 billion baht, and Type B, which consists of investment units held by the Finance Ministry and state agencies with a combined value of around 350 billion baht.
The second option is to raise money to be added to the existing funds, which is more likely because it would be quicker. Establishing a new fund would involve new regulations, causing delays.
According to Mr Lavaron, the ministry believes a new Vayupak Fund is necessary to stimulate investment in the stock market.
He said while the ministry has improved the investment conditions for the Thai ESG Fund, which allows purchasers to make deductions on their income taxes and is expected to stimulate stock market investment, real investment in Thai ESG Funds is only expected around year-end, creating a gap in market stimulation.
The improved conditions for the Thai ESG Fund will be proposed to the cabinet within the next two weeks, said Mr Lavaron.
He said the Vayupak Fund can raise funds and invest in the stock market quicker than waiting for the Thai ESG Fund investment at year-end as investors seek tax reduction benefits.
The improved Thai ESG Fund conditions might not meet the immediate need to stimulate investment, said Mr Lavaron.
Regardless of the approach the ministry chooses to establish the fund, he said new capital will be injected into the market, estimated to exceed 100 billion baht.
Mr Lavaron said he believes the drop in the prices of many stocks presents an investment opportunity. He insisted the investment focus of the Vayupak Fund will mainly be on fundamental stocks.
"Government measures to stimulate the capital market are only one way to build up investor confidence. Strong regulations by the Stock Exchange of Thailand and the Securities and Exchange Commission are crucial to create sustainable investor confidence," said Mr Lavaron.