The Government Pension Fund (GPF) plans to deepen its investments in artificial intelligence and Thai equities, betting on both as safe havens while global markets remain volatile. The fund has returned 7.2-7.3% this year despite heightened investment risks over the past seven months, according to newly appointed secretary-general Soraphol Tulayasathien.
That return is satisfactory and higher than last year's performance, said Soraphol. The fund's primary objective remains generating long-term returns that outpace inflation.
GPF maintains a diversified portfolio under its standard strategy, while members who want more exposure to Thai equities may voluntarily allocate up to 35% of their investments to the domestic stock market.
AI investments and risk management
The global equity market over the past year has been driven primarily by the AI boom. GPF has made significant investments in the sector, including semiconductor manufacturers and South Korean memory chip producers such as Samsung and SK Hynix, both of which have order backlogs extending as far as two years, said Soraphol.
"When technology stock prices rally, the fund gradually takes profits and reduces its exposure at certain times to manage risk," he said. GPF assessed the valuations of some technology companies as excessive and believes investors should pay attention to the "burn rate", or the sustainability of short-term earnings.
The fund is maintaining a balanced allocation between domestic and overseas assets, as well as between fixed-income securities and equities. About 5% of the GPF's portfolio is invested in the SET index, though this allocation is adjusted periodically in response to market conditions. The fund will present its strategic vision and future investment direction under the new management team on Aug 27.
Thai equities as a safe haven
Thai equities have traded below their intrinsic value for more than three years, while overseas equities face concerns over a potential AI-driven bubble, said Soraphol. The Thai market is largely insulated from such risks, making it an attractive safe haven during periods of global market volatility.
Three factors could help attract foreign capital back to Thailand, he said. The first is the "Thailand Story" - major national development projects and a clear strategic direction that enhance the country's investment appeal. The second is corporate earnings, as listed companies have begun reporting improving profitability, accompanied by higher dividend payments and increased share buyback activity. The third is governance and transparency, as regulators address capital market integrity issues, including high-profile cases involving Stark Corporation and More Return.
The SET index remaining sustainably above 1,600 points would require comprehensive country roadshows to showcase Thailand's economic potential to global investors, said Soraphol. Current market conditions provide an opportune moment for such initiatives.
Government employees exploring how AI is reshaping public sector investments can find relevant context in AI for Government and AI for Finance resources.
Risks and changing member behaviour
Despite the improving outlook, GPF continues to pursue a cautious investment strategy. A major risk is uncertainty surrounding the US Federal Reserve's interest rate policy, as fluctuations directly impact global equity valuations. Geopolitical tensions also pose risks by influencing oil prices and inflation, potentially affecting monetary policy decisions.
The speed at which information now spreads has made financial markets increasingly sensitive, allowing investment sentiment to shift dramatically almost overnight, said Soraphol.
GPF also noted a significant change in member behaviour. More members are taking an active role in managing their retirement savings and selecting investment plans that suit their individual preferences. A growing proportion are adjusting their portfolios to emphasise investment in Thailand, marking a notable shift from the past, when domestic equities generally received less attention.
Why this matters for government workers
For government employees who are GPF members, the fund's shift toward AI and Thai equities reflects a broader strategy of balancing growth with risk management. The ability to voluntarily allocate up to 35% of investments to Thai stocks gives members direct control over their exposure to the domestic market. Understanding the fund's rationale - that Thai equities are undervalued while global tech valuations carry risk - can help members make informed choices about their own retirement portfolios.
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