Thai Gold Investment

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Thai Gold Investment

Thai investment in sustainable projects is still considered marginal compared to investment in other projects. Despite that, the list of companies that have shown great performance in environmental, social and governance (ESG) initiatives has grown significantly since 2015 according to the Stock Exchange of Thailand (SET). This means that the interest in sustainable projects has also been on the rise in the last several years in Thailand. Sustainable investors have noted that the financial aspects still play the biggest factor in their investment decision. However, they have also noted that the personal values and ethics of a company also play a crucial role in the
investment decision.

Investing in sustainable projects in Thailand

  • According to a 2018 report, sustainable projects represented only about "1.4% of the total Net Asset Value (NAV) of all mutual funds" in Thailand.
  • While investments in socially responsible projects are still growing in the country, the Stock Exchange of Thailand (SET) noted that 124 Thai companies have outstanding performances when it comes to environmental, social and governance (ESG) initiatives.
  • The number of companies in the SET list has grown over two times since 2015, which shows that the interest in sustainable causes has only been increasing in recent years.
  • At the end of 2020, there were 29 ESG funds in Thailand with THB 26 billion (about $850 million) in assets under management (AUM).
  • Most of the companies on the list operate in the construction (21 firms), services (20 firms), industrial (17 firms), and agriculture (16 firms) industries.
  • Krungsri Research has also noted that businesses in the energy and electricity, agricultural equipment and machinery, tourism, food packaging, and e-commerce sectors have the highest growth potential for Thai investors.
  • The Thai government has specifically focused on the development of alternative energy sources, creating initiatives and incentives to encourage investors in the sector to invest more in the development of facilities powered by biomass, biogas, and waste.
  • The government has also taken some serious measures towards the reduction of fuel with high sulfur content and the decrease in the usage of single-use plastics.

Thai investor attitudes and behaviors towards sustainable investments

  • Globally, a majority of the investors consider ECG factors as a big part of their decision to invest in a given company, with a big focus being placed on "gender diversity, carbon footprint, water usage, and community development efforts."
  • In Thailand, sustainable investors still place a big importance on the financial return from a company and the investment risk.
  • However, personal values and ethics also play a crucial role in their decision to invest in sustainable projects.
  • The report found that social norms are another crucial aspect of the investment process, one that is unique to that type of investment.
  • Socially responsible investors usually avoid financial involvement in causes that go against their values.
  • Thai investors that are interested in the CSR credentials of a company tend to rely on third-party rating agencies that judge companies based on their environment, society, and governance (ESG) performance.
  • According to the report a majority of the current sustainable investors are still investing in companies, while only about 9% have stopped investing.
  • Over half of the sustainable investors invest in sustainable companies every year.
  • Such projects usually occupy either less than 10% or 10% to 30% of the total investment portfolio of those investors, which implies that Thai investors do not see a significant advantage in the investment in sustainable projects compared to conventional portfolios.
  • According to the report, the investment in sustainable and socially responsible companies is perceived as a form of philanthropic contribution that can contribute to the enhancement of their social status and public image.
  • This is probably why some of the major reasons why investors that include sustainability investments in their portfolio do so for tax benefits or to mix their investment pattern.
  • The type of investments that they mostly invest in include deposit/short-term fixed-income funds and stocks/equity funds.
  • About 51% of them also invest in "government bonds/debenture/medium to long term fixed-income funds."

Research Strategy

To provide an overview of the Thai investor attitudes, behaviors, drivers, and motivators towards environmental and socially conscious investments we focused on consulting local news reports and expert analysis about the development of the Thai investment in sustainable projects. Unfortunately, we found that there was little discussion about the specific behavior, attitudes, and drivers from Thai investors that are specifically related to environmental and socially conscious investments. While we did find one report that provided information about the topic at hand, the report analyzed the change in behavior between 2009 and 2016. Nevertheless, as this was the most recent data we were able to procure, we decided to use it in our report to provide some information that directly relates to the behaviors, attitudes, and motivators for investing in sustainable projects in Thailand. One of the reasons for the scarce information may be related to the relatively small part sustainable investments play in the overall investments in the country.
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Sources