Thailand unveils plans to revive stock market

Thailand plans to expand its sustainability fund by adding 200 companies that submit governance and environmental disclosures. This initiative aims to boost the stock market amid economic challenges, political instability, and corporate issues.

The voluntary reporting scheme, inspired by Japan’s Value Up programme, requires fund managers to invest 80 per cent of assets in compliant companies. The goal is to enhance transparency, shareholder value, and stakeholder engagement.

Thailand’s Stock Exchange (SET) is currently Asia’s worst performer in 2024. Foreign outflows have hit 82 billion baht ($2.2 billion) in the first five months, following a 192-billion-baht loss in 2023.

The Thai ESG Fund has been successful, raising 6 billion baht in its first month. To make it more attractive, authorities increased the maximum tax deduction for investors to 300,000 baht and reduced the holding period to five years from eight years.

Finance Minister Pichai Chunhavajira stressed the importance of sustainability for Thai businesses. He warned that companies ignoring good governance and environmental issues may face challenges in both local and international markets.

While the government maintains that lost tax revenue from the increased investor incentive won’t exceed 13 billion baht, concerns remain about its effectiveness in attracting wary investors.

Thailand’s economic growth projections are currently below three per cent for 2024, further pressured by looming court decisions impacting both Prime Minister Srettha Thavisin and the opposition Move Forward Party.

Attribution: The Nikkei Asia