KUALA LUMPUR: Malaysia’s three key state funds are looking to increasingly invest their more than RM1 trillion (US$234bil) of assets overseas, Bloomberg reported.
Citing the Employees Provident Fund (EPF) chief executive officer Tunku Alizakri Alias (pic) who spoke at the Invest Malaysia conference, it noted that regulators have been accommodative and engaging with state funds to diversify outside the country,
“This is really good timing for us to get together as a group, all of the funds, with all the relevant regulators, to come up with a long-term plan on how do we actually manage and balance between the needs of domestic as well as global exposure, ” the global newswire quoted Tunku Alizakri as saying.
Bloomberg said the sentiment is echoed by foreign investors, who have cited concerns over the prospects of a snap election in Malaysia as well as a possible rating downgrade amid a widening fiscal deficit.
Global funds have pulled more than US$7bil from the nation’s bonds and stocks so far this year, it noted.
It also pointed out that state investment fund Khazanah Nasional Bhd has been investing more of its commercial portfolio overseas, especially into sectors such as technology.
“Kumpulan Wang Persaraan, or KWAP, with RM140.8bil of assets under management needs to match its ringgit liability by focusing on domestic investments, even as it looks to international assets by reinvesting proceeds over the past two years, ” it said, quoting chief executive officer Syed Hamadah Syed Othman.
“The fund’s global exposure amounts to less than 20% of total assets.”
Separately, it has been reported that Malaysian institutional and sovereign funds have considerable interest in overseas properties for quite a while now. Their interest to venture abroad took off after the 2008/2009 global financial crisis.
In August 2010, the EPF said in a statement that it was prepared to invest £1bil in British properties. Over the years, it exceeded that amount.
The EPF said in 2014 that most of its investments generated net initial yield (before leverage) in Britain of between 5% and 7%. The yield varies with location, sector and tenant profile.
Tunku Alizakri said on June 13,2020 that the EPF is making the most out of the current headwinds in global markets with its continued investment presence in overseas markets, which makes up 28.8% of the fund’s total investment assets.
The EPF has about RM928bil in investment assets at end-2019, a report by The Star said. It has outsourced RM132.41bil to external fund managers to further optimise returns and also enhance the assets’ performance, the June 19,2020 report said.
Besides commercial office space, warehousing and a hospital chain in Britain, it also invested in the German logistics property market.
Other funds like Permodalan Nasional Bhd, KWAP and pilgrims fund Tabung Haji followed suit with interest in Britain, Europe and Australia.