Posted inRegulation

Thailand loosens cap on offshore investment

The Bank of Thailand (BoT) has raised the ceiling to $100bn for domestic investors who want offshore exposure.
Thailand

The ceiling, which is set by the Securities Exchange Commission (SEC), had previously been $75bn. The move is intended to encourage more Thai investors to invest money in foreign assets, Mathee Supapongse, BoT’s deputy governor for monetary stability, according to a statement from the central bank.

The ceiling is applied to firms regulated by the SEC, such as fund management and securities firms.

Although current overseas investment has not reached the $75bn mark, the new investment limit boosts the SEC’s flexibility in managing the amount of investment quotas requested by fund and securities firms to invest overseas, Chantavarn Sucharitakul, BoT’s assistant governor for corporate strategy and relations group, said in a Bangkok Post report.

Demand for overseas investments have increased significantly in the past three years, Kittikun Tanaratpattanakit, senior research analyst at Morningstar Thailand, told FSA. Overall assets in mutual funds that invest overseas reached around $34bn at the end of July from $23bn in 2015.

Overseas investment funds now represent around 23% of Thailand’s $147bn fund management industry, which compares to just 7.14% in mid-2016.

He noted that of the total assets, around half came from locally-wrapped funds, while the other half came offshore fix-term funds, which are products that invest outside of Thailand with a specified maturity date.

Offshore funds have only been allowed since January last year, when the regulator relaxed the rules for Thai investors to access more global funds. Before that, only feeder funds were permitted for sale to domestic investors.

Other investment regulations have been relaxed in Thailand recently. For example, the SEC issued rules in March that allow asset managers to set-up hedge fund-like products for domestic institutional and high-net-worth investors.

The SEC also allowed private funds to invest in high-risk products without being subject to any investment limit. A private fund is a pooled fund collected from no more than 35 investors and managed by a licensed asset management firm.

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