New Vayupak Fund tipped to boost stock market

Up to B150 billion expected to be raised when investment units go on sale next month

The cabinet has approved in principle the establishment of the Vayupak Fund 1 valued at between 100 billion and 150 billion baht, with investment units expected to be available for purchase by September.

The new investment fund is expected to give a lift to the Stock Exchange of Thailand (SET), the worst performing market in Asia with a loss of 8.4% so far this year, after slumping 15% last year.

The new fund, which will be open to the general public and institutional investors, will have a 10-year term and will include a minimum return guarantee, with a cap on the maximum return rate, Finance Minister Pichai Chunhavajira said on Tuesday.

Additionally, the fund will have mechanisms to protect the investments.

Lavaron Sangsnit, the permanent secretary to the Ministry of Finance, said the Vayupak Fund 1 would be listed on the stock exchange and would follow both active and passive investment strategies.

In terms of equities, the focus will be on companies with good returns, long-term stability, sustainable business practices and good corporate governance, said Mr Lavaron.

SET president Pakorn Peetathawatchai said that investing in the Vayupak Fund 1 at this time is a good opportunity because the price-to-earnings (PE) ratio of the local bourse is low compared to the past and is also lower than those in neighbouring countries.

Stock market analysts welcomed the launch of the fund, saying it would drive the bourse to rebound and stay above 1,300 points. The SET Index closed on Tuesday at 1,297.79, little changed from the end of last week.

“Tactically, the banking and energy spaces could have positive sentiment as the existing Vayupak Fund has a large shareholding in those two sectors,” said Rakpong Chaisuparakul, senior vice-president of KGI Securities (Thailand).

The existing fund’s current top holdings include the energy conglomerate PTT Plc and the financial institutions SCBX and Krungthai Bank, fund data shows.

Suwat Wattanapornprom, an analyst with Krungsri Capital Securities (KCS), said every 10 billion baht worth of new liquidity could boost the SET index by 20-25 points, supporting it to trade in a range of 1,300 to 1,330.

“The major beneficiaries will be stocks in the energy, banking, communication and retail sectors,” he said.

Supported by short- and medium-term fundamental factors, KCS favours PTT, SCB, Bangchak Corp (BCP), Airports of Thailand (AOT), Advanced Info Service (ADVANC), Minor International (MINT) and SCG Packaging (SCGP).

Asia Plus Securities said the new Vayupak Fund would prompt foreign funds to return to the Thai stock market. So far this year, foreign investors have been net sellers of 120 billion baht worth of Thai shares.

“We favour the ten stocks that will be held most by Vayupak fund: PTT, SCB, TTB (TMB Thanachart Bank), BCP, KTB (Krungthai Bank), AOT, ADVANC, GULF (Gulf Energy Development), SCC (Siam Cement), and BDMS (Bangkok Dusit Medical Services),” the brokerage said in a research note on Tuesday.