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Gold to counteract weak Thai stocks, says US$38b Government Pension Fund

Tan KW
Publish date: Fri, 14 Jun 2024, 06:13 PM
Tan KW
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 Thailand’s Government Pension Fund (GPF) is expecting gains from investments in gold, commodities and private equity to help counter a slump in domestic stocks, following a period that has seen its performance struggle. 

The portfolio will return more than 3% in 2024, up from 1.5% in 2023, said Songpol Chevapanyaroj, the secretary general of the state pension fund. The fund has added holdings of gold and commodities as a bet on inflation and lingering geopolitical conflict, he said. 

The GPF, which manages 1.4 trillion baht (US$38 billion or RM179.56 billion), has expanded overseas investments into bonds, stocks and property, in a bid to boost performance amid low returns from local equities and debt. 

“There will be more extreme volatility with ongoing geopolitical conflicts and the upcoming US presidential election,” Songpol said in an interview on Thursday in Bangkok. “Commodity, gold and private equity will still be our good hedging for any excessive movements in the financial market.”

The GPF, which oversees retirement savings for more than one million government employees, has invested about 60% of its assets in international and domestic fixed income securities to safeguard its members’ money. For risky assets, the fund had boosted holdings of global private equity, commodities and gold to 5.2% of its total investments as of March 31, up from 4.5% at the end of last year, according to its website. 

The fund had a return of -1.5% in 2022, its first investment loss since 2008, on rising volatility in the financial market after the Covid-19 pandemic, according to Songpol. He declined to specify the asset allocation plan in the second half of 2024, as the fund is in the process of reviewing its investment strategy. 

For private credit investment, the fund still has limited knowledge of the market and needs more time to study before deciding to invest in this market, he said. 

  - Bloomberg


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