Report: EPF expected to gain from trimming mostly banking stocks amid brouhaha over interest-free loan moratorium

The Employees Provident Fund (EPF) logo is seen at its headquarters on Jalan Raja Laut January 22, 2020. — Picture by Hari Anggara
The Employees Provident Fund (EPF) logo is seen at its headquarters on Jalan Raja Laut January 22, 2020. — Picture by Hari Anggara

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KUALA LUMPUR, Sept 18 — The Employees Provident Fund is expected to gain from trimming its holdings in a number of stocks that include many from the country’s major banks, according to The Edge.

The move came after the FBM KLCI index rose by 7.5 per cent on August 30 from a nine-month low of 1,489.8 points on August 6, the business paper reported today. 

Among the banking stocks, RHB Bank Bhd. was trimmed the most at 0.518 percentage points followed by CIMB Group Holdings Bhd. (0.45ppt), Public Bank Bhd (0.44ppt), Hong Leong Bank Bhd. (0.295ppt) and Malayan Banking Bhd (0.118ppt).

Banking stocks have been reportedly hit by Putrajaya’s directive to waive three months of interest fees for recipients of the federal loan moratorium programme, even as analysts said lenders aren’t likely to be significantly hurt by the policy.

The pension fund also shed some of its holdings in telecommunications stocks, according to The Edge. EPF shares in Axiata Group Berhad. and Maxis Bhd decreased by 0.043 ppt and 0.017 ppt respectively. 

It bought more of Digi.Com Bhd’s shares, however.

Areca Capital Sdn Bhd CEO Danny Wong was quoted as suggesting that the EPF’s recent buy and sell attitude is likely a minor portfolio “readjustment”.

He said the pension fund’s actions were in line with its mandate and driven by “market liquidity”.

“It’s so big it cannot just join the herd movement — buying when the market is buying or selling when the market is selling.

“This will escalate volatility in the market which is not in its interest,” Wong was quoted as saying.

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