EPF's in­vest­ment in­come for 1st quar­ter up 73.9pc to RM11.8b

But fund stays cau­tious amid weak re­cov­ery in com­mod­ity prices, cur­rency volatil­ity

New Straits Times - - Front Page - bt@me­di­aprima.com.my AMIR HISYAM RASID

THE Em­ploy­ees Prov­i­dent Fund (EPF) has posted solid re­sults in the first three months but chief ex­ec­u­tive of­fi­cer Datuk Shahril Ridza Ridzuan is cau­tious about its out­look due to per­sis­tent weak re­cov­ery in com­mod­ity prices and cur­rency volatil­ity.

The coun­try’s largest pen­sion fund posted an in­vest­ment in­come of RM11.79 bil­lion for the first quar­ter ended March, up 73.9 per cent from RM6.78 bil­lion a year ago.

The value of EPF in­vest­ment as­sets reached RM747.17 bil­lion, up 2.2 per cent, or RM16.06 bil­lion, from De­cem­ber 31 last year.

Shahril said the do­mes­tic and global mar­kets had im­proved sig­nif­i­cantly and its eq­uity as­set class contributed the largest por­tion to the in­vest­ment in­come.

“While we have had an en­cour­ag­ing first quar­ter, we re­main cau­tious mov­ing for­ward, as re­cov­ery in com­mod­ity prices re­mains weak, with con­tin­ued cur­rency volatil­ity.”

He noted that the FTSE Bursa Malaysia KLCI had grown by six per cent dur­ing the pe­riod, driven by the growth in the bank­ing sec­tor. Global indices, mean­while, im­proved by as much as 12 per cent, a strik­ing dif­fer­ence from the en­vi­ron­ment last year.

“The pos­i­tive mar­ket con­di­tion was con­ducive for profit-tak­ing ac­tiv­i­ties lead­ing to higher gross in­vest­ment in­come in the first quar­ter of this year, and also lower net im­pair­ment.”

In ac­cor­dance with the Malaysian Fi­nan­cial Re­port­ing Stan­dards, the EPF recorded lower net im­pair­ments to RM775.92 mil­lion from RM1.64 bil­lion this year fol­low­ing the im­prove­ment in ma­jor mar­kets.

Dur­ing the quar­ter, eq­ui­ties made up 41.76 per cent of the EPF’s to­tal in­vest­ment as­sets, con­tribut­ing RM7.1 bil­lion. This rep­re­sented 60.2 per cent of to­tal in­vest­ment in­come.

The EPF said this was 178.6 per cent higher than the RM2.55 bil­lion recorded i n the cor­re­spond­ing quar­ter last year.

“The re­cov­ery in the bank­ing sec­tor contributed to about 30 per cent of the trad­ing and div­i­dend in­come for the port­fo­lio dur­ing the quar­ter.”

Fol­low­ing the com­mence­ment of Sim­panan Shariah on Jan­uary 1, RM952.1 mil­lion of the to­tal gross in­vest­ment i ncome of RM11.79 bil­lion was gen­er­ated for Sim­panan Shariah while RM10.84 bil­lion was for the con­ven­tional ac­count.

Shahril said the per­for­mance of Sim­panan Shariah and the con­ven­tional ac­count would de­pend on mar­ket per­for­mance, thus mak­ing short-term dif­fer­ences be­tween the two in­evitable.

In the long run, the per­for­mance of the two should be sim­i­lar fol­low­ing sim­i­lar strate­gies im­ple­mented for both ac­counts, he added.

He said EPF re­mained fo­cused on de­liv­er­ing a real div­i­dend tar­get of at least two per cent above in­fla­tion over a three-year rolling pe­riod for both Sim­panan Shariah and con­ven­tional ac­count.

Eq­ui­ties made up 41.76 per cent of the Em­ploy­ees Prov­i­dent Fund’s to­tal in­vest­ment as­sets in the first quar­ter of this year.

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