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December 18, 2008

Thai state fund sees negative returns in 2008

Thailand's Government Pension Fund (GPF) said on Wednesday it expected investment returns to fall 6-7 percent in 2008 due to falls in domestic and overseas stocks hit by the global financial crisis, reported Reuters.

The biggest state fund aims for a positive return of 1.0-2.0 percent next year as it plans to focus more on short-term bonds, GPF Secretary General Visit Tantisunthorn said in a statement.

"Normally, a long-term savings fund should be assessed based on its three or five years performance, not just one year. We have to admit that this year is not normal," he said.

The benchmark Thai stock index has nearly halved this year while overseas stock markets have fallen 30-35 percent on average, the statement said.

GPF posted a negative return of 4.45 percent for twelve months that ended September, it said.

The fund registered average positive returns of 8.24 percent during 1997-2007, 6.61 percent during 2003-2007, and 6.47 percent 2005-2007, it said.

It said it was reviewing asset allocations for next year to match changing market risks and would focus more on short-term bonds and other alternative investments such as private equity funds which invest in both local and overseas stocks.

It would continue its existing investment in property funds, which had yielded 6-8 percent on average, it said. The funds invest in long-term rental buildings and apartments.

GPF manages about 376 billion baht ($10.82 billion) of civil servant pension savings. At the end of 2007, about 64 percent of GPF assets were invested in domestic bonds, 13.3 percent in Thai shares and 3.96 percent in property.

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