Krungsri Securities (KSS) states that the Thai Cabinet on Tuesday approved the establishment of the ThaiESG Extra (Thai ESGX) Fund, aimed at stabilizing the Thai stock market. Investment units will be open for purchase between May and June 2025, with funds accepted from two groups:
1) Individuals holding existing Long-Term Equity Fund (LTF) units who wish to continue enjoying tax deductions can transfer their investments to the Thai ESGX Fund. The tax deduction can be claimed up to 500,000 baht, with a maximum of 300,000 baht in the first year, and the remainder spread over the next four years. Transfers must be made within two months, no later than the end of June 2025.
This measure is expected to reduce the sale pressure on LTF units, which have seen sales of 35 billion baht from the beginning of 2025 to the current date. As of March 10, 2025, the Net Asset Value (NAV) of LTFs stands at 160 billion baht.
2) Additional special tax deduction opportunities beyond existing amounts will be offered. Purchases must be completed within two months (ending in June 2025), allowing for a deduction of up to 300,000 baht.
KSS views the launch of Thai ESGX as similar to the 2020 SSFX initiative, which aimed to bring new funds into the market. Strategically, this is seen as a positive factor for the SET Index, particularly for stocks with high ESG ratings and 10 Deep Value stocks. The analyst recommends promising stocks such as CPALL, HMPRO, BDMS, BH, MINT, GPSC, SCGP, BBL, KBANK, and AOT.
Additionally, Kasikorn Securities (KS) remarks that this measure could alleviate redemption pressure from LTFs, which hold over 180 billion baht, and the additional 300,000 baht tax deduction per person could usher in new funds. Meanwhile, as per the data last year, LTF purchases peaked at approximately 24 billion baht, with only 30% invested in stocks. Observations will be necessary to see how Thai ESGX investment guidelines dictate the proportion allocated to Thai stocks.
The analyst notes ESG stocks with strong fundamentals including GULF, ADVANC, and banking groups. Conversely, investors are suggested to exercise caution with stocks outside the ESG criteria funded by LTFs and new unit purchases.
Maybank Securities (Thailand) discloses that the new Thai ESGX offering could increase stock market inflow due to its shorter five-year holding period compared to the 10-year tenure of SSFX.
Thus, the analyst suggests attractive stocks within the Thai ESGX including BDMS, ADVANC, CPN, PR9, TRUE, and BBL, due to their substantial shareholding in TESG and growth profit trends.
