KUALA LUMPUR: Khazanah Nasional Bhd is keeping its focus on key emerging markets such as India and China, as returns from foreign public market investments outperformed other asset classes in 2025.
Khazanah managing director Datuk Amirul Feisal Wan Zahir said the sovereign wealth fund’s global investment strategy centres on diversifying risk across asset classes and capturing long-term growth opportunities.
To this end, Amirul Feisal said India has done well for the fund.
“We have been invested there since 2008, and over the years, it has grown significantly.
“It remains an integral part of our global investment strategy,” he said during the Khazanah Annual Review 2026 media briefing yesterday.
Foreign public market investments, which made up 19.7% of Khazanah’s portfolio, delivered returns of 11.7% in 2025, up from 10.9% in 2024.
Meanwhile, local public market investments, accounting for 50.7% of the portfolio, generated returns of 6.7%, compared with 34.3% a year earlier.
This came amid a more subdued performance in the local equity market, where the FBM KLCI recorded a capital return of 2.3% in 2025.
Private market investments, which accounted for 20.8% of the portfolio, posted negative returns for a second straight year, contracting 3% in 2025 after a 6.6% decline in 2024.
Khazanah chief investment officer Datuk Hisham Hamdan said India and China are crucial markets for the group, along with Asean.
“India is a good country where we have really outperformed.
“We can see that Hong Kong had many initial public offerings last year and I expect this to continue this year.
“One area that we really want to pay more attention to this year is China.
“We do not want to miss the right tail of China’s future,” he said, adding that China has made strong progress in new technology sectors and has delivered a solid performance over the past two years.
Hisham said emerging markets have “done very well” in the last two years and could continue performing if the US Federal Reserve moves to cut interest rates this year.
He noted that global returns remain closely tied to the US economy, which makes up around 25% of global gross domestic product (GDP) but accounts for about 65% of global equity indices.
That said, Amirul Feisal said Khazanah delivered a resilient performance last year despite heightened market volatility brought on by Trump 2.0, which sparked growth pessimism, and Liberation Day, which had shocked markets.
“Throughout last year, there were many events that had caused a lot of uncertainties.
“However, towards the end of the year (sentiment improved), particularly developed markets like the United States, which rolled out the One Big Beautiful Act, while the European Union focused on infrastructure and defence.
“Hence, there was more fiscal spread, which helped markets towards the end of the year.
“The Federal Reserve’s rate cut cycle also helped markets,” he said.
On the domestic front, Amirul Feisal said the tangible execution of policies like Budi Madani RON95, strong GDP and exports growth, higher foreign direct investment (FDI) and a firmer ringgit pointed to strengthening fundamentals in Malaysia.
Khazanah’s total assets rose to RM156bil at the end of 2025 from RM151bil a year earlier, while borrowings stood at RM50.7bil.
Net assets increased to RM105bil in 2025 (RM104bil in 2024), with a 5.2% return.
Realisable asset value cover stood at 3.1 times.
The sovereign wealth fund declared RM2bil in dividends to the government, up from RM1bil in 2024.
Going forward, Amirul Feisal said Khazanah will accelerate the execution of its planned initiative in the year ahead, as it “plans its Malaysia investment strategy as well as its global investment strategy”, and looks to diversify risks across asset classes and geographies.
Amirul Feisal added “there is still a lot to be done still” on airports and airlines.
He also believes that “more could be done” in the renewable energy space, specifically “what Tenaga Nasional Bhd
is doing in terms of the grid”.
“What we have also been doing is fixing or improving the performance of the likes of Axiata Group Bhd in order to make it more resilient going forward.
“Moreover, Dana Impak remains a key focus in all sectors, so this is something that we will accelerate,” he said.
Connectivity, energy transition and digitalisation are the key focus areas in Khazanah’s Malaysia investment strategy.
Amirul Feisal said Malaysia is likely to sustain its growth momentum in 2026, supported by strong private investment and FDI, amidst more modest global growth.
The ringgit strengthened by more than 10% against the US dollar last year, reducing returns from Khazanah’s foreign public market investments to 11.7% from 23.6% in US dollar terms.
Moreover, private market investments would have recorded positive returns of 6.8% in US dollar terms.
To this end, Amirul Feisal said Khazanah has a natural hedge for global investments, with some funding in US dollars for foreign assets, which helps manage currency risk.
“We have cyclicality in terms of markets and profits. But when we invest, we invest as a portfolio, and we invest for the long-term which smooths things out, and that is our focus,” he said.
