The Government Pension Fund (GPF) sees SET50 stocks as attractive due to their fair valuation and dividend potential.
GPF Executive Director Sompol Chebapanyaroge noted that investing in SET50 companies, which are considered pillars of the market, offers opportunities for capital appreciation and dividend income.
“Thailand’s stock market still offers investment opportunities in stocks that are not overly expensive relative to their fundamental value and can provide good returns. Some stocks, especially in the SET50, are expected to benefit from the economic recovery. GPF continues to focus on investing in fundamentally strong stocks and has not changed its investment policy for both domestic and overseas investments,” Mr Sompol said.
Terdsak Taweetiratham, deputy managing director of research at Asiaplus Securities, said investing in SET50 stocks remains attractive because of the high potential for returns given their valuations. But the social security fund’s policy requires it to invest in large, stable companies, limiting its options mainly to SET50 stocks. Investing in small caps could pose liquidity risks.
The growth in value of individual SET50 shares cannot be predicted with certainty due to various uncertainties, but overall, SET50 shares are expected to generate a dividend yield of approximately 3% per year.
“Investments in foreign stocks and other risky assets must comply with the fund’s regulatory framework,” Terdesac said.
Veerasinee Boonmasunsorn, senior research director at Globlex Securities, noted that SET50 stocks often serve as a benchmark for various funds, such as social security funds, which seek to invest in stocks with strong fundamentals. Overseas investments bring opportunities but also carry risks associated with exchange rate fluctuations, especially given the current weakness of the Thai baht. Overseas investments are profitable if the baht continues to weaken, but returns from overseas investments may decline if the baht strengthens.
Jessada Soukdis, director at Finomena Securities, said the Thai Social Security Fund places emphasis on safe investments. Given the size of its assets and liabilities, increasing its risk exposure requires careful consideration and can prevent excessive risk taking.
While the risk level cannot be precisely defined, the fund could benefit from a focus on foreign stocks and bonds, which could potentially generate higher returns than domestic investments.
“Historical data from the past 10 years shows that the average return on global stock markets is around 10 percent and the US market has a 20 percent return, while Thai stocks, especially the SET50, have lower returns due to slow corporate earnings growth. Investing overseas has the potential for higher returns, which is evidenced by other international social security funds that have achieved high returns through flexible and global investment policies,” Mr Jesada said.
