China, India Stocks on Radar for $33 Billion Thai Pension Fund

(Bloomberg) -- Thailand's Government Pension Fund is considering boosting its equity investments in China and India, where the rise of companies focusing on new technologies and the environment may provide high potential returns.

Chinese producers of microchips and renewable-energy equipment and Indian IT firms and drug makers are among the top stock candidates for the 1.1 trillion baht ($33 billion) state fund, according to GPF Secretary-General Srikanya Yathip.

“Our fund continues to grow in such a big way that it's very hard to find good investments in the domestic market,” Srikanya said in a phone interview. “Developing markets such as China and India should offer the outlook for better returns because of the resiliency of their economies during the pandemic.”

The plan to add more Chinese and Indian stocks will help the GPF diversify its equities portfolio, where the bulk of its investments are in developed regions such as the U.S. and Europe. It also comes after the fund's recent performance was affected by lower gains from debt securities.

The GPF delivered a total return of 3.25% in the year through September 30, 2021, compared with 4.73% in 2020, according to its website. Domestic and foreign debt accounted for about 64% of its assets.

The Thai Cabinet last month approved a proposal to raise the ceiling on GPF's foreign assets under management to 60% of the total, up from 40%. Final approval by the Finance Ministry is likely in the latter half of this year, Srikanya said.

The pension fund, which manages money for about 1.2 million government employees and retirees, currently invests about 13% of its assets in overseas stocks, said Srikanya. It also holds about 25% of total assets in overseas debt securities, bringing its foreign holdings near its 40% ceiling, she said.

While declining to specify overseas investment targets, Srikanya said the GPF plans to step up its efforts related to environmental, social and good-governance practices. It will avoid companies that don't meet requisite ESG standards, she said.

As a whole, Thailand's international financial assets jumped 23% from end-2020 to worth $135 billion at mid-2021. That's the most on record in Bank of Thailand figures on financial institutions, mutual funds and individuals dating back to 2015.