Malaysia’s Biggest Fund Buying Stock as Foreigners Sell

Sept. 13 (Bloomberg) — Malaysia’s largest pension fund said it was a net buyer of the nation’s stocks during recent
declines as foreign investors cut their holdings.

The Employees Provident Fund, which manages more than $170
billion of assets, bought good quality and fundamentally sound shares, Mohamad Nasir Ab. Latif, deputy chief executive officer of the fund, said in an e-mail interview yesterday. The FTSE Bursa Malaysia KLCI Index fell 6.8 percent from its July 24
record through Aug. 28 before rebounding 4.8 percent. The gauge slid 0.4 percent as of 11:11 a.m. in Kuala Lumpur.

Being the biggest investor in Malaysia, we view any market extremes as opportunity for us to rebalance our portfolio
for continuous return and risk diversification,
” Kuala Lumpur-based Mohamad Nasir said. “We believe Malaysia is in a stronger footing forward and we expect investors’ interest to come back to this region, especially the emerging countries.

Malaysia’s second-biggest pension fund Kumpulan Wang
Persaraan (Diperbadankan), Thailand’s Government Pension Fund and Indonesia’s state retirement scheme PT Jamsostek have also said they bought local equities during the recent regional
market rout, triggered by concerns over the U.S. potentially tapering its monetary stimulus. The four Southeast Asian funds manage a combined $229 billion of assets.

The KLCI index traded for 14.9 times earnings estimates for
the next 12 months on Aug. 28, the lowest level since April, and was valued at 15.6 times today, data compiled by Bloomberg show. Foreigners sold 6.8 billion ringgit ($2.1 billion) of Malaysian stocks in August, exchange data showed.

Stimulus Concern

The MSCI Southeast Asia Index has dropped 15 percent since
May 22, when the U.S. Federal Reserve signaled its asset-buying program could be trimmed if the U.S. economy showed a sustained
recovery. Global funds pulled about $44 billion from emerging-market stock and bond funds since the end of May, EPFR Global, which tracks fund flows, said Aug. 23.

The Malaysian pension fund, known as EPF, is looking at
real estate opportunities in Europe and the U.S. to diversify risk, Mohamad Nasir said. The fund currently has about 1.5
percent of its total assets in global properties, which are
mainly in the U.K and Australia, and this will naturally
increase as the fund size grows, he said.

The fund also plans to raise its overseas investments to 23
percent from 20 percent to widen its earnings base, he said. EPF will continue to expand its international mandates which cover both bonds and stocks in Asia as long as they meet certain
investment criteria, Mohamad Nasir said.

To contact the reporter on this story:
Elffie Chew in Kuala Lumpur at

To contact the editor responsible for this story:
Michael Patterson at


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