Khazanah bets on developed markets in global push

KUALA LUMPUR: Sovereign wealth fund Khazanah Nasional Bhd plans to increase its exposure to developed markets as the impact of the pandemic has pressured valuations.

“In the depths of the crisis there was some real good opportunities to buy some longterm assets, especially in markets that we were underexposed to,” managing director Datuk Shahril Ridza Ridzuan said in a Bloomberg Television interview.

Khazanah, which holds stakes in the country’s top companies Axiata Group Bhd and IHH Healthcare Bhd, plans to keep increasing the proportion of its assets invested overseas from less than 20% currently, he said.

That wouldn’t happen overnight, he added, as the fund’s current strategy allocation is likely to take five to seven years to put in place.

The fund, which had a net asset value of Rm73.1bil (Us$17bil) as of end-2019, saw its profit reach a record last year as it divested from companies including Alibaba Group Holding Ltd. Khazanah swung to Rm7.36bil profit in 2019, from a Rm6.27bil loss the previous year.

The divestments were part of khazanah’s turnaround plan, which involves the fund separating its portfolio into commercial and strategic investments. Most foreign assets fall under commercial, meaning that the assets are expected to deliver returns of 3 percentage points above Malaysia’s inflation on a five-year rolling basis.

“We don’t expect 2020 to be better than 2019 obviously,” Shahril said. “But we still believe that, from an operations point of view, we’ll still be in the black.”