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Thailand's pension industry assets up 3.54% in January-May as contributors increase

By Asia Asset Management  
Jul 16, 2019

Thailand's pension industry assets grew 3.54% in the first five months of 2019 from a growing number of contributors to the non-mandatory provident fund system, which is targeted at private sector employees.

The industry had 1.17 trillion baht (US$37.86 billion) of total assets as at May 31, up from 1.23 trillion baht on December 31, 2018, according to figures posted on the website of the Association of Investment Management Companies (AIMC).

The number of contributors grew 2.42% to 3.38 million from 3.30 million at the end of last year.

Contributors can channel between 2% and 15% of their monthly salaries to their pension accounts, which is matched by employers. Total contributions for each member is capped at 500,000 baht a year.

According to the AIMC’s data, 87% of the pension industry’s assets is invested in securities, including stocks and bonds, and the balance 13% in bank deposits, promissory notes and other assets.

The share of assets in stocks jumped 10.95% over the first five months of the year to 213.76 billion baht from 192.67 billion baht at the end of 2018.

A fund manager at a Thai asset management firm predicts that the exposure to stocks will increase over coming months, partly because the political climate in the country has remained stable in the wake of the first general election since a military coup five years ago.

"Investors welcome political stability, it is good for business and for investors, it allows them to have a better clarity on what to expect in terms of policies and market direction," the Bangkok-based fund manager tells Asia Asset Management, speaking on condition of anonymity.

The March 24 election was won by Prayut Chan-o-cha, who led the coup in 2014. He was appointed as prime minister on June 5.

The pension industry’s allocation to debenture bonds or asset-backed debt issued by companies rose 2.16% between January and May to 337.39 billion baht.

The share of assets in government bonds and treasury bills rose 2.8% to 325.37 billion baht, and the share in bank deposits was down 0.44% to 137.14 billion baht.

AIMC comprises 25 licensed mutual fund companies in Thailand, including foreign firms. The group typically publishes industry data on its website without providing analysis.