AyG
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Post by AyG on Nov 20, 2017 9:20:28 GMT 7
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Post by Fletchsmile on Nov 20, 2017 13:56:25 GMT 7
I'd like to find more of interest in the Thai bond space, but rarely can. This change would probably make it even less likely The Thai bond market hasn't really been of much appeal to me in the least 20 years. First 10 years because I was more focused on equity, next 10 because the yields never seemed that great. Of the ones we've held recently: We've held TMB Corporate Bond fund for several years. On the plus side, it held up nicely in 2008 by returning +3% while our Thai equity funds tanked 30% - 40%. It does seem to edge cash for returns, and when the DPA amount was scheduled to decrease I thought about adding to it, but it's not exactly inspiring We held some CPAll debentures until a year or so back. They paid 4.1% for 3 years until Oct 20016. But these had 15% WHT, so it came down to about 3.5%. Not bad at the time to park some spare cash, but later tranches were even lower rates, and as the article suggests, by the time you took 15% WHT off the single bond coupon, didn't bother. So I can imagine this will likely make fixed income mutual funds even less attractive. One of my previous Thai employee pension funds was 70% allocated to bonds 30% to equities. Normally this split is too high towards bonds for me, even for a pension, but as it's only a few years before I take it, and not massive amounts I've just left as is. YTD (for 10 months) it has returned about 3.3% on the bond element. Again not fantastic but it's all relative  10 year Thai sovereigns only yield around 2.X% so aren't particularly attractive either. So if someone levvies 15% WHT on a bond mutual fund, it's even less likely I'd put money there. |
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Post by Fletchsmile on Nov 20, 2017 14:05:05 GMT 7
... Still, it will cut foreign inflows into the Thai bond market, and should (with luck) push the baht down a bit in value. I'm not sure how much impact it would have on foreign inflows to be honest. Most of the foreign inflows would be into the bonds themselves, eg sovereigns/ corporates and not into fixed income mutual funds. The big institutional players would go direct, rather than waste money on fees in a fund. So the changes won't affect most foreign fixed income buyers. The most likely change in demand would be on Thai retail investors who buy fixed income funds, rather than foreign investors. It's possible that as a result there may be more outflows into foreign assets though and you might get the baht down a little that way = more outflows rather than less inflows. Given the nature of Thai retail investors I wouldn't be hoping for much though  |
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AyG
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Post by AyG on Nov 20, 2017 14:51:22 GMT 7
... Still, it will cut foreign inflows into the Thai bond market, and should (with luck) push the baht down a bit in value. I'm not sure how much impact it would have on foreign inflows to be honest. Most of the foreign inflows would be into the bonds themselves, eg sovereigns/ corporates and not into fixed income mutual funds. The big institutional players would go direct, rather than waste money on fees in a fund. So the changes won't affect most foreign fixed income buyers. The most likely change in demand would be on Thai retail investors who buy fixed income funds, rather than foreign investors. It's possible that as a result there may be more outflows into foreign assets though and you might get the baht down a little that way = more outflows rather than less inflows. Given the nature of Thai retail investors I wouldn't be hoping for much though You're quite right. I only quickly scanned the original article and hadn't noticed it referred just to funds. |
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chiangmai
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Post by chiangmai on Nov 20, 2017 17:55:01 GMT 7
That doesn't sound helpful for Thai retirement and pension fund products, given an ageing population and tight social security concerns it seems a bit like a shot to the foot - perhaps it wont fly.
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Post by rgs2001uk on Nov 20, 2017 20:52:48 GMT 7
I'd like to find more of interest in the Thai bond space, but rarely can. This change would probably make it even less likely The Thai bond market hasn't really been of much appeal to me in the least 20 years. First 10 years because I was more focused on equity, next 10 because the yields never seemed that great.Of the ones we've held recently: We've held TMB Corporate Bond fund for several years. On the plus side, it held up nicely in 2008 by returning +3% while our Thai equity funds tanked 30% - 40%. It does seem to edge cash for returns, and when the DPA amount was scheduled to decrease I thought about adding to it, but it's not exactly inspiring We held some CPAll debentures until a year or so back. They paid 4.1% for 3 years until Oct 20016. But these had 15% WHT, so it came down to about 3.5%. Not bad at the time to park some spare cash, but later tranches were even lower rates, and as the article suggests, by the time you took 15% WHT off the single bond coupon, didn't bother. So I can imagine this will likely make fixed income mutual funds even less attractive. One of my previous Thai employee pension funds was 70% allocated to bonds 30% to equities. Normally this split is too high towards bonds for me, even for a pension, but as it's only a few years before I take it, and not massive amounts I've just left as is. YTD (for 10 months) it has returned about 3.3% on the bond element. Again not fantastic but it's all relative 10 year Thai sovereigns only yield around 2.X% so aren't particularly attractive either. So if someone levvies 15% WHT on a bond mutual fund, it's even less likely I'd put money there. Unless it was for preserving an inheritance or somewhere safe to park the kids school fees for a few years, I concur, could never see the point of investing in them. |
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