Thailand’s Ministry of Finance is gearing up to introduce a long-term equity fund aimed at bolstering the struggling Thai stock market, the worst performer in Asia this year.
The Ministry of Finance is set to reconsider the structure of the Long-Term Equity Fund (LTF), for those that are nearing expiration, with the aim of appealing to investors. The LTF was initially established to provide tax benefits and serve as a savings plan. However, a significant number of investors are currently divesting their stakes due to losses in the stock market.
The potential establishment may be integrated into an existing environmental, social, governance (ESG) fund, providing investors with tax exemptions for a period of five years, according to Finance Minister Pichai Chunhavajira’s announcement on Tuesday.
The anticipated fund aims to mitigate the impact of long-term fund outflows, which have been a considerable strain on the market. Pichai emphasized that more information about the fund would be disclosed soon.
On Tuesday, the main stock index posted a 0.73% gain, although it has experienced a decline of approximately 9% since the beginning of the year. The new fund is expected to create a pause for investors contemplating divestment, as they could rethink selling decisions due to the ESG alignment and tax incentives.
Industry data indicates there are around 188 billion baht in long-term fund units eligible for redemption.
