The state investment arm’s strategic firms like Maybank, Sime Darby and SP Setia to continue earnings momentum

By ALIFAH ZAINUDDIN / Pic By TMR File

PERMODALAN Nasional Bhd (PNB), the country’s largest fund manager, expects its 10 key majority owned listed firms’ share prices and earnings will beat the local stock exchange forecast and key index this year.

Chairman Tan Sri Abdul Wahid Omar said the state investment arm’s strategic companies including Malayan Banking Bhd (Maybank), Sime Darby Bhd and SP Setia Bhd, recorded higher share prices last year.

The country’s largest fund expects these companies, which are considered PNB’s strategic investment firms, to continue the momentum this year.

“The consensus earnings for the local exchange in 2017 was about 7% and the forecast remains at 7% this year.

“The FTSE Bursa Malaysia KLCI (FBM KLCI) component stocks have so far performed better than that. For PNB, we would certainly like to see our strategic companies to deliver a much higher percentage than 7%,” Abdul Wahid said at the Malaysia Leadership Succession Summit in Kuala Lumpur yesterday.

Abdul Wahid expects the strong corporate earnings and economic fundamentals will help the sector to brave the present selldown in the local equity market.

He said the market sell-off was due to the Wall Street’s poor performance last Friday and on Monday.

Abdul Wahid said the recent dip in the FBM KLCI index was due to external factors, and did not reflect any fundamental shifts of the local market.

“We don’t have to look at day-to-day fluctuations. As long as Malaysian corporates continue to improve their earnings and pay better dividends, the share prices will pick up,” he said.

The local bourse dipped 40.62 points lower at the close of yesterday trading, one of the largest single-day drop in recent memories, to close at 1,812 as the meltdown on the global equity market persisted yesterday. The Bursa Malaysia index dropped to a low of 1,795 before recovering to close at 1,812 points. Despite the selloff, the KLCI is still 10.2% higher than 12 months ago.

PNB currently manages an investment size of RM270 billion and its investments in the local equities market made up 10.4% of the index’s market capitalisation.

Meanwhile, Abdul Wahid said the government’s decision to waive stamp duty on smalland mid-cap stocks from March 2018 for three years is a “good move” that would lead to better liquidity and coverage.

“We have to ensure that attention is given to these stocks as some may not be as liquid and the coverage may not be adequate. With the incentives announced, hopefully there will be more funds in these counters,” he said.