KHAZANAH BOOST FOR DOMESTIC MART

Economists positive on sovereign wealth fund’s plan to scale down global presence, reduce stakes in non-strategic areas

KHAZANAH Nasional Bhd’s reported move to reduce its global presence and trim stakes in non-strategic areas may be good news for domestic assets and will help boost the ringgit, said economists.

Although the asset sales will mean a change in the sovereign wealth fund’s strategic direction, review on February 28, the fund will look to trim stakes in companies identified as non-strategic to 15 to 25 per cent — near the typical holding levels of pension funds,” two sources were quoted as saying.

Khazanah was also aiming to reduce its physical presence in London, Mumbai and the Silicon Valley in the United States, as well as trim its foreign property and tech investments, said sources.

Locally, Khazanah reportedly may cut stakes in CIMB Group Holdings Bhd, Axiata Group Bhd and UEM Group Bhd.

However, the sources said Khazanah would maintain strategic holdings in Tenaga Nasional Bhd, Malaysia Airlines Bhd, Malaysia Airports Holdings Bhd and Telekom Malaysia Bhd, among others.

Putra Business School associate professor Dr Ahmed Razman Abdul Latiff said with the change in Khazanah’s investment objectives, local companies should take the opportunity to boost their assets’ efficiency and value if they wished for investments from the sovereign wealth fund.

“Khazanah will still need to ensure that its local investments give the intended returns.”

Razman said selling off Khazanah’s foreign investments to reinvest in local markets would have some impact on the ringgit, albeit temporarily.

Sunway University economics professor Dr Yeah Kim Leng said Khazanah’s potential overseas divestment largely reflected the change in its strategic direction to align with the government’s needs and aspirations.

It might not necessarily boost domestic asset markets if the foreign asset sell-offs were directed at paring down government debts and reducing its debt servicing burden, he added.

Khazanah (Nasional Bhd) will still need to ensure that its local investments give the intended returns.

Putra Business School associate professor