KUALA LUMPUR — Dec. 21, 2018: Following another year of decline in the index of the local bourse, the head of Permodalan Nasional Berhad (PNB) has described Malaysia’s corporate earnings as a concern.
The drop in the FBM KLCI index as of yesterday made it four out of five years that the index had recorded a negative price return.
But PNB’s president and group chief executive officer Datuk Abdul Rahman Ahmad also commented that in rality, the situation is not too bad given that other global markets declined even more.
According to Rahman, after a strong 2017, the Malaysian corporate value was affected by the uncertain economic environment and volatile commodity prices.
“Our own strategic company actually declined by nearly 11.8 per cent after 2017, where we grew in terms of market capitalisation by about 25.2 per cent.
“The other big challenge is on the other corporate Malaysia across all sectors, especially within the telecommunications side and construction and utilities. We saw a significant decline in the market capitalisation of some of our strategic companies,” Rahman observed.
On the corporate sector outlook, Rahman said it would depend on the economic and commodity price cycle in 2019.
If the prices of crude palm oil and other commodities improve and the oil price remains resilient, corporate growth can possibly recover.
“We would also like to see Malaysian companies grow their revenue and optimise their costs to expand. We believe that despite the challenges, there is an opportunity to look at operations in the areas of technology development or utilisation of technology to become more efficient,” said Rahman.
Rahman also clarified that all PNB’s divestment decisions were based on its own investment requirements as its assets were owned substantially by the public and did not have any impact on government finances unlike other entities.
He cited strategic government investment fund Khazanah Nasional as one that whose divestment decision would depend on the government’s prerogative. — Bernama