Malaysian Funds With Over 1 Trillion Ringgit Seek Gains Overseas

Malaysia’s three key state funds are looking to increasingly invest their more than 1 trillion ringgit ($234 billion) of assets overseas.

The Employees Provident Fund, Malaysia’s largest pension fund with 924.75 billion ringgit of assets, said regulators have been accommodative and engaging with state funds to diversify outside the country, Chief Executive Officer Alizakri Alias said at the Invest Malaysia conference on Tuesday.

“This is really good timing for us to get together as a group, all of the funds, together with all the relevant regulators, to come up with a long term plan on how do we actually manage and balance between the needs of domestic as well as global exposure,” he added.

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The sentiment is echoed by foreign investors, who have cited concerns over the prospects of a snap election in Malaysia as well as a possible rating downgrade amid a widening fiscal deficit. Global funds have pulled more than $7 billion from the nation’s bonds and stocks so far this year.

Malaysian state investment fund Khazanah Nasional Bhd. has been investing more of its commercial portfolio overseas, especially into sectors such as technology, Managing Director Shahril Ridza Ridzuan said. It’s the duty of state funds to diversify sources of income for the country, he added.

Kumpulan Wang Persaraan, or KWAP, with 140.8 billion ringgit of assets under management needs to match its ringgit liability by focusing on domestic investments, even as it looks to international assets by reinvesting proceeds over the past two years, said Chief Executive Officer Hamadah Syed Othman. The fund’s global exposure amounts to less than 20% of total assets.

©2020 Bloomberg L.P.

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