• Total investment income recorded at RM13.50 billion
• Domestic equity portfolio recorded income of RM2.57 billion
• Equities portfolio contributed RM7.47 billion to income
KUALA LUMPUR, 13 December 2019: The Employees Provident Fund (EPF) reported a total investment income of RM13.50 billion for the third quarter ended 30 September 2019 (Q3 2019) as a result of operating in an uncertain and volatile market that has worsened since 2018.
EPF Deputy Chief Executive Officer (Investment) Dato’ Mohamad Nasir Ab Latif explained the EPF’s domestic equity portfolio was affected by the weak earnings growth in the domestic equity market that in turn saw the Malaysian stock market declining 5.3%. For Q3 2019, the portfolio recorded an income of RM2.57 billion.
Weakening market conditions coupled 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 contributed to the volatility.
“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 KLCI. Fortunately, our diversified portfolio, which includes investment income from overseas assets, helped mitigate some of the impact,” said Dato’ Nasir.
He added 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 Q4 2017 on lower purchasing power and a weak job outlook.
“The rising geo-political risks are expected to continue to add pressure on the global economy. We are cautious about the Malaysian economy’s growth outlook. If trade tensions between the US and China continue, there will be knock-on effects on trade-dependent economies like ours.”
He noted that 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.
Still, Dato’ Nasir assured that the EPF will continue to leverage on the good buying opportunities that will arise during any market downturn.
“Volatility also provides 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,” said Dato Nasir.
Summary of Investment Assets and Income
*Contributions from Malaysian Government Securities & Equivalent, Loans and Bonds
A total of RM1.30 billion out of the RM13.50 billion gross investment income was generated for Simpanan Shariah, and RM12.20 billion for Simpanan Konvensional. Simpanan Shariah derives its income solely from its portion of the Shariah portfolio while income for Simpanan Konvensional is generated by a share of both the Shariah and conventional portfolios
Issued by the EPF Media Desk
Corporate Affairs Department
13 December 2019