Yahoo Finance Thailand to Raise Tax Breaks, Trim Lock-Ups to Buoy Stocks
(Bloomberg) -- Thailand plans to raise the tax allowance and trim lock-up periods for holders of ESG-focused funds as part of efforts to bolster the local equity market, hit by a foreign investor exodus.
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Individual investments of as much as 300,000 baht ($8,170) in ESG-focused funds will become eligible for tax breaks, up from 100,000 baht, said Pornanong Budsaratragoon, secretary-general of the nation’s Securities and Exchange Commission.
The government will also reduce the period that the investments must be held to qualify for the levy waiver to five years from eight years, she said, noting that the proposals will be forwarded to the cabinet for approval.
Prime Minister Srettha Thavisin’s government has stepped up efforts to revive investor confidence in domestic stocks after corporate scandals, irregular market trading and political uncertainty contributed to a 7% slide so far this year in the country’s SET Index. The measure is Asia’s worst performing major benchmark this year after foreign investors withdrew about $3 billion from Thailand’s equities.
The Stock Exchange of Thailand is also poised to implement a set of measures from July 1 to shore up investor confidence. It will require high-frequency traders to register before they can place their orders, besides disclosing information on investors conducting “inappropriate trading practices” to member brokerages to enable more effective supervision.
The adjustments to the ESG-focused fund investment conditions follow the finance ministry’s approval in December of the initial tax incentive to entice individuals to buy local equities and green investments. The measures drew about 6 billion baht into ESG funds.
“The reduction in the lock-up period will help attract more individual investors into these funds,” Pornanong said, adding the move was in line with the government’s commitment to promote ESG-linked assets including bonds and digital tokens.
“Investment rules for ESG-focused funds will also be eased to allow them to invest in stocks that have a good corporate governance rating from accredited agencies,” she said.
Finance Minister Pichai Chunhavajira said the relaxation in equities eligible to be covered by the funds will expand the number of stocks to more than 200 from about 100 shares now.
The SET ESG Index, a gauge of ESG-linked companies, jumped 0.9% on Monday, trimming this year’s loss to 9%. The 121-member measure tumbled 13% last year, compared with a 15% slide in the SET Index.
Thailand’s finance ministry is also weighing setting up a new state-managed fund aimed at appealing to local investors by offering guaranteed returns, Pichai said. Such a fund can attract more individuals and support the broader stock market, he said.
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