The decline is due to operating in an uncertain and volatile equity market which has worsened since 2018, the EPF said in a press release yesterday.
The EPF’s domestic equity portfolio was affected by the weak earnings growth in the domestic equity market that in turn saw the Malaysian stock market declining some 5.3%, it said.
“Emerging markets continued to feel the heat from the escalating US-China trade war. Asian markets remained volatile, with Hong Kong’s stock market being the weakest. In Asean, Singaporean and Thai equity markets underperformed, Indonesia’s came under pressure from a strong US dollar while China’s market was only prevented from weakening further by Beijing’s stimulus measures,” EPF deputy CEO (Investment) Datuk Mohamad Nasir Ab Latif said in the statement.
“We had to work through a challenging market environment, including a weakening KLCI. Fortunately, our diversified portfolio, which includes investment income from overseas assets, helped mitigate some of the impact,” he added.
For the third quarter, the EPF’s equities portfolio recorded an income of RM2.57bil.
He said that the deteriorating trade conditions also caused the global economic slowdown, with export-reliant nations in the region such as Malaysia, Singapore and Thailand being the most impacted.
The EPF said that as a result of this, consumer confidence also declined, with Malaysia’s falling to the lowest since the fourth quarter of 2017 on lower purchasing power and a weaker jobs outlook.
“The rising geo-political risks are expected to continue to add pressure on the global economy. We are cautious about the Malaysian economy’s growth outlook. If trade tensions between the US and China continue, there will be knock-on effects on trade-dependent economies like ours,” Mohamad Nasir said.
He added that 2019 has been a difficult year and that near-term market uncertainties will continue to persist, and that this will affect the capital markets.
“The EPF’s performance reflects these uncertainties and our outlook for the market remains cautious and prudent,” he said.
Mohamad Nasir also said the EPF will continue to leverage on any good buying opportunities that may arise if there is any further market downturn.
“Volatility also provides EPF with an opportunity as we are always on the lookout for assets with sound fundamentals and good cash flow that can add long-term value to our portfolio. As a long-term fund, our concern has always been to achieve long-term results,” he said.
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