The Government Pension Fund (GPF) plans to focus on investments in artificial intelligence (AI) and Thai equities, which it views as safe havens amid global market volatility.
According to Soraphol Tulayasathien, the newly appointed secretary-general of GPF, despite heightened investment risks over the past seven months, the fund's portfolio has delivered returns of 7.2-7.3% this year. He said he is confident GPF's diversified investment strategy will enable it to maintain at least this level of return for the full year.
A return of 7.2-7.3% is satisfactory and higher than last year's performance, said Mr Soraphol. The fund's primary objective remains to generate long-term returns that outpace inflation.
Under its standard investment strategy, the GPF maintains appropriate portfolio diversification, while members who wish to increase their exposure to Thai equities may allocate up to 35% of their investments to the domestic stock market on a voluntary basis.
The global equity market over the past year has been driven primarily by the AI boom. Recognising AI as a structural transformation capable of enhancing productivity, GPF made significant investments in the sector, including semiconductor manufacturers as well as South Korean memory chip producers such as Samsung and SK Hynix, both of which have order backlogs extending as far as two years, he said.
When technology stock prices rally, the fund gradually takes profits and reduces its exposure at certain times to manage risk, said Mr Soraphol. GPF assessed the valuations of some technology companies as excessive and believes investors should pay attention to the "burn rate", or the sustainability of short-term earnings, he noted.
The fund is maintaining a balanced allocation between domestic and overseas assets, as well as between fixed-income securities and equities. About 5% of the GPF's portfolio is invested in the SET index, although this allocation is adjusted periodically in response to market conditions.
The fund is scheduled to present its strategic vision and future investment direction under the new management team on Aug 27, providing greater detail on the organisation's strategy and portfolio management approach amid ongoing global economic challenges.
Stock market outlook
The Thai stock market remains an attractive investment opportunity, said Mr Soraphol.
In the GPF's view, Thai equities have traded below their intrinsic value for more than three years, while overseas equities face concerns over a potential AI-driven bubble. The Thai market is largely insulated from such risks, making it an attractive safe haven during periods of global market volatility.
Three factors are beginning to emerge that could help attract foreign capital back to Thailand, he said. The first is the "Thailand Story", which is the presence of major national development projects and a clear strategic direction that enhance the country's investment appeal.
The second is corporate earnings, as listed companies have begun to report improving profitability, accompanied by higher dividend payments and increased share buyback activity.
The third is governance and transparency, as regulators address capital market integrity issues, including high-profile cases involving Stark Corporation and More Return, with investigations and regulatory actions becoming clearer.
The SET index remaining sustainably above 1,600 points would require comprehensive country roadshows to showcase Thailand's economic potential and new investment narrative to global investors, said Mr Soraphol.
Current market conditions provide an opportune moment for such initiatives, he said.
Despite the improving outlook, the GPF continues to pursue a cautious investment strategy. A major risk is uncertainty surrounding the US Federal Reserve's interest rate policy, as fluctuations have a direct impact on global equity valuations.
Geopolitical tensions also pose risks by influencing oil prices and inflation, potentially affecting monetary policy decisions. Furthermore, the speed at which information now spreads has made financial markets increasingly sensitive, allowing investment sentiment to shift dramatically almost overnight, said Mr Soraphol.
In addition, GPF noted a significant change in the behaviour of its members. Based on the fund's data and engagement with members, more of them are taking an active role in managing their retirement savings and selecting investment plans that suit their individual preferences.
A growing proportion of members are adjusting their portfolios to emphasise investment in Thailand, marking a notable shift from the past, when domestic equities generally received less attention, he said.
