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Published on July 24, 2007

The move is part of authorities' efforts to boost capital outflow, in order to stem the baht's appreciation against the US dollar.

The securities watchdog yesterday said the proposed increase would facilitate the planned introduction of two new types of financial instrument, of which foreign securities were the underlying assets - transferable-custody receipts (TCRs) and exchange-traded funds (ETFs).

TCRs will be issued by financial institutions, which will raise funds from individuals to invest in foreign securities. Each TCR will be listed on the Stock Exchange of Thailand (SET), to accommodate trading liquidity.

ETFs are open-ended mutual funds that can be traded anytime during the day. Typically, ETF performance tracks stock market indexes.

Offshore investment will be discussed in the next two weeks at a meeting between the SEC, the SET, the Association of Securities Companies and the Association of Investment Management Companies (AIMC).

The meeting will consider whether to broaden the types of investor under its supervision who are allowed to invest offshore, so as to cover individual funds and foundations.

The AIMC earlier said it would ask the central bank to allow domestic individuals and companies to make maximum offshore investments of $1 million and $50 million, respectively.

The SEC also plans to discuss with the Public Debt Management Office ways to amend regulations to make it easier for foreign institutions to issue baht-denominated bonds.

In addition, the SET is considering a plan to cross-list equity exchange-traded funds, based on the blue-chip SET 50 Index, on foreign stock markets by the end of the year, the SEC said.

Meanwhile, TMB Asset Management (TMBAM), the country's third-largest mutual-fund player, has kicked off its foreign-investment fund (FIF) index series after postponing the launch from early this year due to the volatility caused by the baht's appreciation.

It plans to launch the TMB World Equity Index along with the TMB Emerging Markets Equity Index at the end of the month, rolling out four more by year-end and at least two more next year.

The other four funds set for this year are the Japan Equity Index, the Euro Equity Index, the Korea Equity Index and a money-market fund.

The overall size of TMBAM's FIF account is currently about Bt8.6 billion.

The launch of the index-fund series is likely to result in the company gaining the biggest share of the market for FIFs.

TMBAM also plans to launch one new property fund, and if the 30-per-cent withholding-tax measure is cancelled, it will raise the size of its existing Central Pattana Property Fund.

It will also launch an Energy Index Fund by the end of the year.

The firm has increased its target for assets under management this year. Originally, it planned to grow by Bt15 billion, but after achieving Bt20 billion in new assets in the first half, it raised the target to Bt30 billion.

Siriporn Chanjindamanee,

Piyarat Setthasiriphaiboon

The Nation