Tabung Haji shifts to buy more bonds, reduce equities


  • Business
  • Wednesday, 16 Jan 2019

Datuk Seri Zukri Samat group managing director and Ceo of Tabung Haji speaks during a briefing on the progress of Lembaga Tabung Haji's turnaround plan, seated on the right is Datuk Zaiton Mohd Hassan, chairman of risk, audit and management committee. - RAJA FAISAL HISHAN/The Star

KUALA LUMPUR: Lembaga Tabung Haji (TH) plans to shift to a more conservative asset allocation strategy by owning more bonds, while reducing its exposure to the equities market as part of its turnaround plan.

According to the pilgrim fund’s group managing director and chief executive officer Datuk Seri Zukri Samat, TH’s exposure to the equities market was previously “too high”, and that did not suit its role as a Haj management institution.

“We are not a fund manager, our role is to administer the Haj, so the focus of investment should now be more on fixed income, rather than equities,” Zukri said.

“It is not that we are not going into equities, but I think the balance will be more skewed towards fixed income, where we can have a steady stream of returns,” he added.

Speaking to reporters during a briefing on TH’s corporate turnaround plan here yesterday, Zukri said the fund would remain selective with regards to the investment grade of the fixed-income securities in which it plans to invest.

On how TH plans to divide its investment portfolios under the new strategy, Zukri said: “We have not tabled the new asset allocation (strategy) to the board yet, but personally, I think we should have 60%-70% in fixed income, depending on the fund size that we have.”

He revealed that in 2016, 55% of TH’s assets were in equities, before reducing to 50% in 2017. Still, he said, the rate was deemed too high, considering TH’s main role as a Haj affairs manager, and not as an investment fund manager.

Meanwhile, Zukri announced that TH’s balance sheet had now been restored, following the completion of the transfer of all its underperforming assets to a special-purpose vehicle (SPV), Urusharta Jamaah Sdn Bhd.

And that put TH in a “legal” financial position to pay dividends - albeit at a much lower rate than in previous years - to its depositors for 2018.

“The SPV transactions are deemed completed as at Dec 31, 2018,” Zukri said, noting that TH’s assets were now either equal or slightly more than its liabilities.

“We have restored the balance sheet of TH; and so for 2018, we will be legally capable of declaring hibah (or dividends) to our depositors.

“But please don’t expect too much for 2018,” he explained, citing the general weak performance of the domestic and global equities markets last year, as well as the fact that the fund had just recovered from a “fever”.

Urging depositors to be patient, Zukri said he was confident that TH’s financial position would continue to improve, and the fund would be in a much better position financially to pay higher dividends to its depositors for 2019.

“We hope our depositors will be patient with us just for 2018.

“We have put in place a turnaround plan and it will work,” he said.

And to improve transparency, Zukri said TH would provide quarterly updates on its financial performance from 2019 onwards so that depositors can track the fund’s financial performance.

It was revealed that under the recently completed asset-transfer exercise to help restore TH’s balance sheet, 106 listed domestic equities, one unlisted plantation and 29 properties and plots of land had now been placed under Urusharta Jamaah to conduct rehabilitation and recovery of values in those assets.

In total, TH had transferred RM19.9bil worth of underperforming assets to the SPV in exchange for RM10bil worth of seven-year sukuk with a yield of 5% and RM9.9bil worth of Islamic redeemable convertible preference shares.

The equities transferred under the exercise involved those in which TH had unrealised losses of more than 20%, and they were non-controlling blocks of the fund.

 

 

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Tabung Haji , Zukri Samat , bonds , equities , fund , TH ,

   

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