NOVEMBERASIA BUSINESS OUTLOOK8NEWSROOMKOREAN CENTRAL BANK TO ROLL OUT POLICIES TO CURB RISING HOUSE PRICESThailand's US$77 billion Social Security Fund is set to invest US$11.6 billion into global private assets as part of a strategic overhaul aimed at improving its underwhelming returns, according to an interview with Petch Vergara, a board member of the fund. This move is essential for addressing poor performance amid rising demands from an aging population.The fund, which supports healthcare, unemployment benefits, and pensions for 25 million Thai workers, has averaged returns of under 3 percent over the past decade, a rate far below its potential. In response, starting next year, the fund plans to shift away from its heavily domestic-focused and low-risk investments, which Petch, a former Goldman Sachs executive, labeled as unsustainable.Petch, who joined the fund earlier this year, warned that if the fund continues on its current path, it could face bankruptcy by 2051. She emphasized that the existing portfolio, concentrated in Thai assets, poses risks to long-term growth, as low-risk investments might seem safe in the short term but hinder future potential returns.This strategy shift comes at a time when Thailand's population is aging rapidly. As of 2023, 20 percent of the country's 66 million people were over 60 years old, a sharp rise from 10 percent two decades ago. The number of elderly citizens has doubled from 6.2 million in 2004 to 13 million by December 2023, further straining the social security system. South Korea's central bank governor, Rhee Chang-yong, stated on Monday that he needs to discuss the effects of recent government policies aimed at curbing household debt with board members before deciding on a potential interest rate cut. This came in response to questions about market expectations for a rate reduction during the upcoming policy meeting on October 11.Rhee emphasized that it would be inappropriate to comment on any rate changes before having these discussions, particularly concerning the possibility of consecutive rate cuts over the next two months.His comments come as expectations grow for the central bank to lower its policy rate from the current 3.50 percent, the highest level since 2008, in order to stimulate domestic demand. However, the Bank of Korea has maintained caution, holding rates steady at 3.50 percent last month due to concerns about rising house prices and household debt.The central bank's next policy meeting is scheduled for October 11, when it will consider these factors alongside the impact of government debt-curbing measures. THAILAND TO INVEST FRACTION OF SOCIAL SECURITY FUND INTO GLOBAL ASSETS
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