Thai Government Pension Fund Targets AI, Domestic Equities
Thailand's Government Pension Fund (GPF) prioritises artificial intelligence (AI) and Thai equities in its investment strategy. The fund views these as stable allocations amidst global market volatility, despite maintaining an overall cautious approach.
Strategic Investment Shift
The Government Pension Fund (GPF) focuses new investments on artificial intelligence (AI) and Thai equities, according to Soraphol Tulayasathien, its newly appointed secretary-general. This strategy positions these assets as safe havens against ongoing global market volatility.
The fund's portfolio delivered returns of 2.7–3.7% over the past seven months, despite heightened investment risks. Mr. Soraphol expressed confidence that the GPF's diversified approach will maintain this return level for the entire year. The fund's primary objective remains generating long-term returns that outpace inflation.
AI and Valuation Concerns
Recognising AI as a structural transformation, the GPF has made significant investments in the sector. These include semiconductor manufacturers and South Korean memory chip producers like Samsung and SK Hynix. Both firms report order backlogs extending up to two years. Mr. Soraphol noted that the AI boom primarily drove global equity markets last year.
However, the GPF assesses some technology company valuations as excessive. It advises investors to monitor the "burn rate" (the unsustainability of short-term earnings). The fund gradually takes profits and reduces exposure when technology stock prices rally, managing risk.
Thai Equity Appeal
Thai equities remain an attractive investment opportunity, according to the GPF. Thai stocks have traded below their intrinsic value for over three years. This makes them an attractive safe haven during global market volatility, as the Thai market is largely insulated from such risks. Three factors could draw foreign capital back to Thailand.
First is the "Thailand Story," reflecting major national development projects and clear strategic direction. Second is improving corporate earnings, with listed companies reporting higher dividends and increased share buybacks. Third is enhanced governance and transparency, as regulators address capital market integrity issues.
The GPF maintains a cautious investment strategy, despite the improving outlook. Global equity valuations face uncertainty from US Federal Reserve interest rate policy fluctuations and geopolitical tensions affecting oil prices and inflation. Financial markets have become increasingly sensitive, allowing sentiment to shift rapidly.
The GPF also observed a significant change in member behaviour, with more members actively managing retirement savings and increasing their Thai equity exposure. The fund will present its strategic vision and future investment direction on 27 August, providing further details on its portfolio management approach.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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