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Published on August 24, 2007

"In the short run, the sub-prime concern is only a psychological effect. However, for investors looking for medium- to long-term offshore buys, this is their opportunity to diversify their portfolio at a discount price," president Pichit Akrathit said yesterday.

Although MFC's latest foreign investment fund (FIF) - the MFC Invest Global Agribusiness Fund (I-AGRI) - closed its initial public offering with only Bt83 million in subscriptions out of its Bt800-million registered size, Pichit is confident that the open-ended fund will expand over time when investor anxiety over the US credit crunch dissipates.

"The US Federal Reserve took four months to handle the case of hedge-fund Long Term Capital Management in 1998. The US sub-prime woes now are different from what happened then, with less implied volatility. I'm optimistic that the Fed will be able to handle the case soon," he said.

"In the long view, foreign funds will flood back to emerging markets, including Thailand, as in the end they have nowhere else to go."

The country's fifth-largest mutual-fund player will launch an FIF that will invest in a real-estate investment trust (REIT), after receiving the green light from the Securities and Exchange Commission. The SEC currently caps REIT holdings at 15 per cent of an FIF's net asset value, but a proposal to scrap the ceiling is waiting for final approval from the commission's board.

REITs are publicly traded trusts that hold title to real-estate assets and pass the income stream from these assets along to trust holders, which are the equivalent of shareholders. Equity REITs usually specialise by property type, such as apartments, shopping centres, commercial office buildings and healthcare facilities.

MFC is also mulling another FIF with commodities as its underlying asset, and is looking to introduce a hospitality fund this year.

Piyarat Setthasiriphaiboon

The Nation