SOLID GAINS

THE Em­ploy­ees Prov­i­dent Fund’s in­vest­ment in­come surges 36.6 per cent to RM11.51 bil­lion in the sec­ond quar­ter. Equity gains con­tinue to be the main profit driver, says chief ex­ec­u­tive of­fi­cer Datuk Shahril Ridza Ridzuan.

New Straits Times - - Business -

THE Em­ploy­ees Prov­i­dent Fund’s (EPF) in­vest­ment in­come grew 36.6 per cent to RM11.51 bil­lion in the sec­ond quar­ter ended June 30 this year, thanks to the strong Bursa Malaysia.

“Mar­ket con­di­tions have im­proved from a year ago and all as­set classes in our port­fo­lio have recorded healthy year-on-year growth, with eq­ui­ties con­tin­u­ing as the main profit driver for the quar­ter un­der re­view,” said chief ex­ec­u­tive of­fi­cer Datuk Shahril Ridza Ridzuan in a state­ment yes­ter­day.

The pen­sion fund posted a RM8.44 bil­lion in­vest­ment in­come in the same quar­ter last year.

How­ever, Shahril was cau­tious about the fund’s per­for­mance for the rest of the year.

“While we recorded sig­nif­i­cant im­prove­ments in year-on-year per­for­mances for both the pre­ced­ing and cur­rent quar­ters, there is a slow­down in mo­men­tum that saw cor­po­rate prof­its nor­mal­is­ing in Q2 this year. We, there­fore, ex­pect a mod­er­a­tion in in­come growth for up­com­ing quar­ters.”

Shahril said with the ring­git show­ing signs of im­proved sta­bil­ity, global in­vest­ments would re­main one of EPF’s sig­nif­i­cant rev­enue driv­ers in the fu­ture.

EPF recorded a lower net im­pair­ment of RM1.34 bil­lion dur­ing the quar­ter, which was an im­prove­ment of RM2.28 bil­lion, or 62.98 per cent, from RM3.63 bil­lion pre­vi­ously.

From the RM11.51 bil­lion in­vest­ment in­come, fixed-in­come in­stru­ments con­trib­uted 37.29 per cent, eq­ui­ties (53.72 per cent), real es­tate and in­fra­struc­ture (6.23 per cent) and money mar­ket in­stru­ments (2.64 per cent).

Eq­ui­ties, which made up 41.96 per cent of EPF’s to­tal in­vest­ment as­sets as at June, con­trib­uted RM6.18 bil­lion of in­come, 61.45 per cent higher than RM3.83 bil­lion recorded in the cor­re­spond­ing quar­ter of last year.

EPF also ben­e­fited from di­ver­si­fi­ca­tion into other as­set classes, in­clud­ing fixed-in­come in­stru­ments and real es­tate and in­fra­struc­ture in­vest­ments through its sub­sidiaries.

A to­tal of RM820.71 mil­lion of the to­tal in­vest­ment in­come was gen­er­ated from Sim­panan Shariah and RM10.69 bil­lion from Sim­panan Kon­ven­sional.

“In eq­ui­ties, the bank­ing sec­tor has been out­per­form­ing since the be­gin­ning of the year while the bulk of our im­pair­ments recorded for the quar­ter came from the telecom­mu­ni­ca­tions and oil and gas sec­tors. If this were to con­tinue, we ex­pect Sim­panan Kon­ven­sional to ben­e­fit and out­per­form in the short term,” said Shahril.

The value of EPF in­vest­ment as­sets rose 3.92 per cent, or RM28.67 bil­lion, to RM759.78 bil­lion in the sec­ond quar­ter from RM731.11 bil­lion as at De­cem­ber 31 last year.

Of that, RM362.5 bil­lion, or 47.71 per cent, were in syari­ah­com­pli­ant in­vest­ments and the bal­ance in non-syariah as­sets.

As at June 30, EPF’s over­seas in­vest­ments, which ac­counted for 29 per cent of its to­tal in­vest­ment as­set, con­trib­uted 32.50 per cent to the to­tal in­vest­ment in­come dur­ing the pe­riod un­der re­view.

“Our for­eign in­vest­ments have proved to be a sig­nif­i­cant rev­enue driver in re­cent years, de­spite mak­ing up less than 30 per cent of to­tal in­vest­ment port­fo­lio as at Q2 this year. The in­crease in global as­set val­ues mit­i­gated the neg­a­tive ef­fect from the strength­en­ing of the ring­git, there­fore op­por­tu­ni­ties for us to re­alise profit,” said Shahril.

He said while the do­mes­tic mar­ket re­mained in­te­gral to EPF’s in­vest­ments, it needed to di­ver­sify its port­fo­lio into broader mar­kets with bet­ter in­vest­ment op­por­tu­ni­ties and greater liq­uid­ity to en­able EPF to ex­e­cute strate­gies in line with its man­date.

PIC BY AIZUDDIN SAAD

Eq­ui­ties, which made up 41.96 per cent of Em­ploy­ees Prov­i­dent Fund’s to­tal in­vest­ment as­sets as at June, con­trib­uted RM6.18 bil­lion of in­come, 61.45 per cent higher than RM3.83 bil­lion recorded in the cor­re­spond­ing quar­ter of last year.

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