KUALA LUMPUR, July 9 — Malaysia’s strategic investment fund Khazanah Nasional Bhd found good opportunities to buy overseas assets during the Covid-19 pandemic, and will continue to push to invest more of its funds abroad to diversify the country’s income source, a report has said.
In an interview with newswire Bloomberg, its managing director Datuk Shahril Ridza Ridzuan noted that the sovereign wealth fund had reset its strategy in 2018 to use funds with a focus on both a long-term view on wealth generation for Malaysia and on strategic investments within.
“That strategy is still valid, I think last year it panned out really well for us, we had a record year profit in 2019, and 2020 essentially we are building on the strategy again.
“That means finding opportunities during the Covid-19 crisis to acquire new assets at much more reasonable prices than when they were trading pre the crisis,” he said in a video of his interview with Bloomberg Television.
He noted that Khazanah Nasional had headed into the Covid-19 period with a “fairly strong balance sheet”, adding that the sovereign wealth fund still maintains its long-term view.
“I think in the depths of the crisis there were some real good opportunities to acquire long-term assets especially in markets that we were underexposed to, and in sectors we wanted to build on for the long term, so we take on some of the opportunities, we start building positions as well.
“We think over the long term emerging markets continue to provide good growth opportunities, but you have to be careful which sectors you are exposing yourself to and which debts you take on,” he said in the interview.
Despite ratings agencies trimming their ratings on Malaysia’s outlook, Shahril Ridza said Khazanah Nasional remains focused on building for the long term, noting: “Ratings essentially will move up and down during that period. Again, I think it’s important we stay focused on essentially building the portfolio, realigning the portfolio based on the mandate that we have, and making sure basically we are in the right markets for the long term.”
He said Khazanah Nasional has been gradually expanding its global assets portfolio which he said was the right thing to do, as a sovereign wealth fund like Khazanah Nasional has to move away from just solely domestic sources of income when seeking to diversify a country’s income source.
Shahril Ridza said Khazanah Nasional currently has less than 20 per cent of its assets invested overseas, and plans to increase its assets abroad over time.
But these shifts to invest more abroad will not happen overnight, with the process of rebalancing Khazanah Nasional’s assets portfolio expected to take five to seven years, he said in the Bloomberg interview.
As for the outlook for Khazanah Nasional, Shahril Ridza expected the fund to still be in the black.
“Of course we look long term. Again as I say, 2019 was a great year for us, 2020 everybody is expecting it’s going to be a very difficult year for market participants as a whole. That said, markets have rebounded and I think it’s really up to us to take advantage of some of these rebounds and at the same time build positions for the future,” he said in the video interview.
But with Khazanah Nasional owning Malaysia Airlines and also holding substantial investments in the tourism sector, Sharil Ridza also expected such factors to affect the fund in terms of valuation.
“We don’t expect 2020 to be better than 2019 obviously. But we still believe that, from an operations point of view, we’ll still be in the black,” he told Bloomberg Television.
In a report regarding the interview, Bloomberg also quoted Shahril Ridza as saying “In life, never say never to anything” when asked regarding the prospects of Malaysia Airlines merging with AirAsia Group Bhd.
As measures to curb the spread of Covid-19 cases, many countries have imposed travel restrictions, resulting in tourism, hospitality industry players and airlines taking a hit.
On Tuesday, Shahril Ridza was reported saying that Khazanah Nasional is waiting for Malaysia Airlines Bhd to come up with a plan to revive the airline, and that the fund intends to help the company to move forward but such efforts would take time to work out.