KUALA LUMPUR — Sept. 5, 2018: Total investment income for the second quarter ended June 30 for the Employees Provident Fund rose 7.64 per cent to RM12.39 billion from the same period last year, mainly due to its diversification into different markets and sectors, and achieved on a less than favourable trading environment in the domestic market.
According to Deputy Chief Executive Officer (Investment) Datuk Mohamad Nasir Ab. Latif, the escalating trade tensions between the United States and China and the US interest rate hike contributed to capital outflows from emerging markets, including Malaysia.
Thus, while some developed markets, including the US and Eurozone countries, recorded gains in their equity markets, the emerging markets recorded negative returns and with Asean being one of the worst performers, Malaysia was not excluded from the downturn.
Equities made up 40.61 per cent of EPF’s total investment assets in the second quarter, contributing RM7.98 billion and representing 64.44 per cent of total investment income for the period.
A total of 52.09 per cent of EPF’s investment assets were in fixed income instruments, which continued to provide consistent and stable income,” he said.
The quarter saw fixed income investments recording RM4.09 billion, equivalent to 33.07 per cent of the quarterly investment income.
Other contributors to the investment income were Malaysian Government Securities and equivalent (RM2.40 billion), loans and bonds (RM1.70 billion), money market instruments (RM215.44 million), real estate and infrastructure (RM91.73 million).
The real estate and infrastructure asset class continued to provide the EPF with an inflation hedged returns, with more income expected to come in the later part of the year.
Overseas investments, which accounted for 26.50 per cent of total investment assets, contributed 38.30 per cent to the investment income in Q2.
On outlook, Nasir said the domestic investment environment was likely to turn favourable in the second half of the year, with an easing of foreign outflows and clearer policy direction from the new government. — Bernama