‘PENSION FUNDS NOT INVESTING IN BITCOIN’
Digital currency is highly speculative investment, where value does not reflect fundamentals, says LTAT CEO
MALAYSIA’S pension fund managers are not putting money into bitcoin despite the digital currency’s recent stratospheric rise.
Armed Forces Fund Board (LTAT) chief executive officer Tan Sri Lodin Wok Kamaruddin told NST Business that bitcoin is a highly speculative investment, where the value does not necessarily reflect its fundamentals.
“We don’t have any intention to invest in bitcoin. We would prefer to confine our investment within the country where we can, to some extent, control the risk and investment better,” he said in a telephone interview.
Lodin said the government statutory body would not take the risk in such investments.
“Since Bank Negara Malaysia deems it illegal, we would not want to have anything to do with it. I think it is something that the public should refrain from getting involved with their hardearned money,” he added.
Lodin said LTAT is currently managing RM9 billion worth of armed forces retirement money.
“We have got quite a fair distribution of our assets in different sectors, especially in line with the government’s economic development programmes such as infrastructure, property development, plantation and ship-building as well as retail operations like BH Petrol,” he said.
Lodin said the LTAT does not plan to invest abroad.
“No doubt in some cases, investing abroad may be more attractive but at the same time the risk is higher such as currency and politics. If it is within the country, we can mitigate the risks,” he said, adding that LTAT is able to pay, on an average, 11 per cent dividend annually to contributors.
In a separate meeting with the Employees Provident Fund (EPF), its chief executive officer Datuk Shahril Ridza Ridzuan said cryptocurrencies such as bitcoins have no intrinsic value and do not provide any kind of actual asset yield. Therefore, it is very hard to invest in it.
“Cryptocurrency is buying something with the hope of selling it to someone else for a higher price,” he said.
Shahril Ridza said the speculative element in the returns profile is too great for a fund like EPF, where it focuses on generating actual returns on assets.
IQI Global chief economist Shan Saeed concurred, saying that the bitcoin has no sustainable value and none of the global central banks approved it. “Nobody has approved bitcoin as a mode of (payment) instrument. Although people are buying, the price is likely to crash. It is a fancy item with no fundamentals,” he said.
Shan advised investors in Malaysia to stay away from bitcoin, saying that the chances of losing money are fairly high.
“Recently the United Kingdom regulators have warned investors to stay away from bitcoin. I’m not in favour of bitcoin because it is a virtual currency. It’s not even worth looking at,” he said.
“The incredible rise of bitcoin over the last few weeks has all the hallmarks of a major topping action when a speculative asset in the final euphoric stages of a big bubble formation makes some unsustainable huge price jumps,” he said.
The Retirement Fund Inc (KWAP) chief executive officer Datuk Wan Kamaruzaman Wan Ahmad recently said cryptocurrency is not the type of risk it would take.
“We are not investing in cryptocurrency because we prefer to take moderate risks. However, we do monitor the movement of the bitcoin’s trends,” he said in a recent interview with BFM.
He said KWAP has always aimed for more stable investment, with slightly above doubledigit returns for its shareholders.
Last week, Bank Negara announced that Malaysia had recorded RM75 million transactions monthly from four digital currency exchanges in the country.
Its deputy governor Abdul Rasheed Ghaffour said the digital currency exchanges were Luno, CoinHako, XBit Asia and PinkExchange.
He said Bank Negara would meet cryptocurrency exchanges this week, noting that the global market cap of digital currency stood at US$420 billion (RM1.7 trillion).
He said while digital currencies were not legal tender in Malaysia, the central bank was not stopping trading because “a ban would curb innovation and creativity”.
On Friday, bitcoin plunged by 30 per cent to below US$12,000. It had recently shot to US$20,000.