Thailand's Government Pension Fund (GPF), the biggest state fund, aims to increase its offshore exposure to over a fifth of its total portfolio by the year-end, its head said on May 22.
-- To raise foreign asset allocation to 21-22 percent by year-end
-- Overseas asset increase via stock, private equity, real estate exposure
-- Positive on Asian markets Taiwan, China and India
Secretary General Visit Tantisunthorn said investments would increase in global stocks, real estate and private equity while there would be a reduction in the percentage of the 385 billion baht ($12.1 billion) fund's foreign fixed income holdings.
"Asian economies are not slowing down to that extent, which is why we are biased in our allocations to Asian markets," he told Reuters on the sidelines of the Asian Investor investment conference in Hong Kong. He said foreign asset allocation would rise to 21-22 percent by end-2008 from around 14 percent at the end of 2007. Most of the increase in foreign assets would come via stocks, where the exposure would rise to 12 percent from 9 percent.
Visit continues to back the stock markets of Taiwan, India and particularly of China.
"Taiwan is still a happening market and look at China - where can you get that kind of growth?" he said. Despite his bullish view on some of the region's equity markets, Visit said the time was not right for increasing exposure immediately.
His fund had remitted about $400 million overseas to take advantage of a strong baht and this was awaiting deployment in equity markets. Visit said the funds were moved when the baht traded around 31.5 to a dollar.
"The funds are ready and they're outside, but we are not investing now. We are waiting for the market to be less volatile and for a clearer picture to emerge," he said while indicating the deployment would be done by the year-end.
Earlier this year the GPF, which manages civil servant pension savings, said it had intended to raise its foreign exposure to 21-22 percent by the end of the first quarter.
But Visit said that decision had been delayed on account of uncertainties and volatility in global financial markets. These factors would also prevent the fund from replicating last year's strong performance when it earned a return of 9.2 percent.
As a result the fund, which receives about 18 billion baht in new cash from members each year, would expand in size by about 30-35 billion baht this year, compared with last year's addition of around 40 billion. He said his fund was increasing its exposure to alternative asset classes as returns on traditional investments were declining, despite having the same degree of risk.
The new asset classes that the Thai GPF was aiming to gain exposure to included global real estate and global private equity.