KUALA LUMPUR — Jan. 1, 2018: Permodalan Nasional Berhad (PNB) will increase its exposure to private investments both domestically and internationally subject to the right opportunities.
This is part of PNB’s implementation of its strategic asset allocation to enhance returns sustainably and within its risk tolerance.
In his New Year message, PNB chairman Tan Sri Abdul Wahid Omar said the agency will engage with core companies where it has at least 10 per cent shareholdings, or RM1 billion in value, to drive better performance.
“It is important for Malaysian corporates to improve their earnings growth to generate higher total shareholder returns (TSR).
“The consensus of 2017 listed firms’ earnings growth of 5.7 per cent was below our earlier expectation.
“Although the forecast 2018 earnings growth is higher at 6.9 per cent, it is our hope that with the right strategy and execution, the earnings growth will be higher,” he said.
One major issue was the lack of shariah-compliant stocks or equity instruments in financial services.
“We all know the importance of the financial services sector for any country’s development.
“Notwithstanding the success of Malaysia as a global leader in Islamic finance, there are effectively only three shariah-compliant public-listed companies – BIMB Holdings, Syarikat Takaful Malaysia and Malaysia Building Society Berhad – with combined market capitalisation of RM15 billion,” he said.
This is hardly five per cent of the total market capitalisation of listed banks & financial services companies.
At the same time, there are many shariah-compliant funds that need to invest in shariah-compliant financial services stocks.
Apart from PNB, the Employees Provident Fund also has some RM59 billion shariah funds that is expected to grow to RM100 billion soon.
According to Wahid, one effective way to meet this need is to designate a portion of shares in Malaysian banks that have sizeable Islamic finance business as Islamic or I shares.
Maybank Islamic, for example, is the largest Islamic bank in Malaysia with total assets of RM185 billion, three times larger than Bank Islam. Its Islamic financing now makes up 56 per cent of Maybank’s total loans & financing in Malaysia.
In terms of profit contribution, Maybank’s Islamic finance activities contribute some 25 per cent to Maybank Group’s total profit.
For 2017, Wahid said, PNB’s successful transformation of strategic companies resulted in a significant increase in the market capitalisation of its strategic companies by RM39 billion.
This represented a weighted average TSR of 26 per cent, double the returns on the KLSE composite index of 13.2 per cent. — Bernama