KUALA LUMPUR, Dec 13 — The Employees Provident Fund (EPF) posted an investment income of RM13.50 billion for the third quarter (Q3) ended Sept 30, 2019, down 7.6 per cent from the same period last year, as a result of operating in an uncertain and volatile market that has worsened since 2018.
Deputy chief executive officer (Investment) Datuk Mohamad Nasir Ab Latif said the state pension fund’s domestic equity portfolio was affected by the weak earnings growth in the domestic equity market, which in turn saw the Malaysian stock market declining 5.3 per cent.
For Q3 2019, the portfolio recorded an income of RM2.57 billion, he said in a statement today. He did not provide a comparison figure.
Nasir said the market volatility was contributed by weakening market conditions, along with the uncertainties arising from the US-China trade war, the ongoing uncertainty over a Brexit deal, political instability in Hong Kong and geo-political tensions in the Middle East.
“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.
“We had to work through a challenging market environment, including a weakening FBM KLCI. Fortunately, our diversified portfolio, which includes investment income from overseas assets, helped mitigate some of the impact,” said Nasir.
He noted that the deteriorating trade conditions not only affected equity markets but also caused the global economic slowdown, with export-reliant nations in the region such as Malaysia, Singapore and Thailand being the most impacted.
As a result, consumer confidence also declined, with Malaysia’s falling to the lowest since the fourth quarter of 2017 on lower purchasing power and a weak job outlook.
Nasir said 2019 has been a difficult year and that near-term market uncertainties will continue to persist, which will affect the capital markets.
“The EPF’s performance reflects these uncertainties and our outlook for the market remains cautious and prudent,” he said.
He gave assurance that the fund will continue to leverage on the good buying opportunities arising during any market downturn.
“Volatility also provides the 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 added. — Bernama
