The Association of Investment Management Companies (AIMC) has urged the Revenue Department to consider extending the tax-benefit period for investors who venture into long-term equity funds.
Vorawan Tarapoom, chief executive officer of BBL Asset Management and chairperson of the association, yesterday said 2016 would be the last year that LTFs investors can use their investment funds to benefit from a tax reduction.
She said that as of March 28, the size of LTF funds amounted to Bt222.589 billion, which is a large proportion of the stock market’s overall value.
The loss of the tax incentive might lower the overall size of LTFs considerably and, given their importance to the market, such downsizing would affect the entire market at the beginning of 2016, she explained.
Vorawan said the AIMC would continue to negotiate with the Finance Ministry and the Revenue Department about extending the tax benefit beyond 2016, as well as about any other changes that will be made to LTF policy.
However, she urged the government to provide an answer as soon as possible, because only two years were now left in which to decide.
“If the government does not extend the policy and decides to make changes to the policy on LTFs, asset-management companies will have to be well prepared to sell their LTF stock in a way that will least affect the market,” she said.
Meanwhile, Vorawan said the assets under management (AUM) of mutual funds generally had grown seven-fold since 2002 – with an average growth of 19.45 per cent per year. At the end of last year, mutual funds’ AUM in the stock market amounted to Bt3.076 trillion, against just Bt435.3 billion in 2002.
AUM expanded by 17.67 per cent, or Bt461.94 billion, from the end-2012 level.
Meanwhile, in terms of new products in the market, the Macquarie Securities Group – one of the leading issuers of derivative warrants (DWs) in Asia – announced the launch of a new SET50 Index DW product in the Kingdom yesterday.
Noppadon Duangthipnest, senior manager of equity derivative sales at Macquarie Securities (Thailand), said the DW market in the country had grown significantly over the past few years, with average monthly turnover increasing almost four times from Bt5.7 billion in 2012 to Bt21.4 billion last year.
“There is plenty of room for the derivative-warrant market to grow in Thailand and, given that Index DWs are now available on the Stock Exchange of Thailand, there is further growth potential for the local market,” he said.
Noppadon said that as of last year, overall DW trading value in the country accounted for 2.5-3 per cent of stock-market value, which was a relatively small contribution when compared to other mature DW markets such as Hong Kong, South Korea and Singapore, where DW value accounted for 25 per cent, 10 per cent and 8 per cent, respectively.
Barnaby Matthews, division director and head of derivatives in Southeast Asia for the Macquarie Securities Group, said he believed the trading value of DWs in Thailand’s stock market could grow to as much as 6-8 per cent of stock-market value in the next five years, but this was largely dependent on the growth of the entire market and investor awareness of DWs. He said the rule change in 2011 that allowed the direct listing of warrants in the bourse had contributed to the growth of the DW market in recent years.