Thai long-term equity funds to be revived soon.

The Thai government plans to revive the long-term equity fund (LTF) programme to support the local stock market, which has been the worst performer in Asia so far this year.

The fund could be set up within the existing environmental, social and governance fund (ESG) framework and investors would receive similar tax breaks for five years, Finance Minister Pichai Chunhavajira told reporters on Tuesday.

The fund is expected to help slow down selling from long-term funds, which has added pressure to the market, he said, adding that details were expected to be announced soon.

The Stock Exchange of Thailand index was up 0.5% on Tuesday but has still dropped about 9% since the start of the year.

With the new fund, “investors who want to sell will stop and think whether to sell or not because if they are in the ESG fund, they will also receive tax benefits”, Mr Pichai said.

The original LTF programme that ran until 2019 was popular with investors. In order to enjoy tax savings, investors had to hold their units for seven calendar years. The last LTF units that were purchased in 2019, totalling an estimated 188 billion baht, are maturing this year and next.

Many investors have been selling their units due to stock market losses, with the majority of LTF holdings being in large-cap stocks, Mr Pichai said.

Former prime minister Thaksin Shinawatra said recently that LTFs are more effective at stimulating market activity than Thai ESG funds.

CGS International Securities has estimated that 43 billion baht worth of LTF units were redeemed in 2024, bringing the value of units outstanding to 220 billion baht at the end of 2024.

Without new LTF inflows, the brokerage estimated LTF redemption of 45 billion baht this year and 40 billion in 2026.4

Credit : https://www.bangkokpost.com/business/investment/2958898/thai-long-term-equity-funds-to-be-revived-soon.