EPF-owned stocks lost RM8b in value since end-June

Declines in banking stocks have sent EPF’s paper value south


THE combined value of Employees Provident Fund’s (EPF) investment in 191 stocks dropped by RM7.9 billion compared to the end of June as the local equity market continued to be hammered by poor corporate performances and global uncertainties.

A compilation by The Malaysian Reserve on Wednesday showed that the total equity value of EPF’s stocks declined to RM149.94 billion compared to RM157.87 billion at the end of the second quarter this year (2Q19), erasing RM7.93 billion in total value.

Performance of the local stock market has been poor with the FTSE Bursa Malaysia KLCI dropping to a low of 1,572.03 points in May. Year to date, the main index, which tracks 30 largest stocks, is -5.3% while its one-year return is at -7.44%. The main index closed yesterday’s trading at 1,601 points.

Declines in banking stocks had sent EPF’s paper value south. The five largest decliners accounted for a total RM1.01 billion in total value depreciation.

The statistics showed EPF’s top holdings included Public Bank Bhd, Malayan Banking Bhd (Maybank), CIMB Group Holdings Bhd and Hong Leong Bank Bhd (HLB).

EPF’s stakes in Public Bank dropped by RM288.7 million from RM2.8 billion at the end of June to RM2.6 billion on Wednesday as the share price of the bank fell.

The country’s largest private pension fund’s net value in Maybank, HLB and CIMB’s also slumped RM171.3 million, RM168.6 million and RM149.6 million respectively since 2Q19.

As of Wednesday, EPF’s stake in Maybank was valued at RM2.9 billion, HLB (RM1 billion) and CIMB (RM1.5 billion).

EPF’s 7.58% stake in Petronas Chemicals Group Bhd also saw a drop by RM230.3 million, valuing the fund’s stake in the Petroliam Nasional Bhd subsidiary at about RM1 billion.

EPF is Malaysia’s largest institutional fund with over RM730 billion in investment assets and the fifth-biggest national pension fund in Asia.

The seventh-largest pension fund in the world has a total current equity assets of US$35.9 billion (RM149.7 billion) under management through 249 securities, according to Bloomberg data.

Equities, which made up 39.2% of EPF’s total investment assets, continued to be the main revenue driver, contributing RM6.33 billion, equivalent to 51.4% of total investment income for 2Q19.

A check on EPF’s website shows the provident fund’s equity investment value increased to RM347.71 billion in 2Q19 from RM336.05 billion in 1Q19. This represents an increase of RM11.7 billion or 3.5%.

The retirement fund’s investment in Digi.Com Bhd and Axiata Group Bhd also took a beating following the failed merger between Axiata and Telenor ASA’s Asia-Pacific business.

EPF has a 12.9% stake in Digi and 15.8% in Axiata. Both shareholdings were valued at RM1.2 billion and RM1.7 billion as of Wednesday.

The EPF recorded lower investment income of RM12.32b in 2Q19 ended June 30, 2019, due to weaker equities market sentiment.

EPF last week said its total investment income dropped slightly to RM12.32 billion for 2Q19 from RM12.39 billion recorded in the same quarter a year ago.

The fund warned the market conditions for the rest of the year would be extremely challenging and volatile. Equities, which accounted for 39.2% of the fund’s total investment assets, contributed RM6.33 billion or 51.4% of its total investment income in the April through July period.

By industry sector, the fund’s largest exposures are in the financials (38.1%) and consumer staples (15.2%) sectors.
EPF’s largest five-year
increase is in the consumer staples sector whereas its largest five-year decrease is in the energy sector.

Thirty-eight percent of the institutional fund’s portfolio is invested in financials across 63 securities, with a market value of US$14.2 billion, a drop of US$453.9 million since the previous quarter.

The EPF’s second-largest sectoral investment is in consumer staples accounting for 15.2% of its total portfolio.

Industrial stocks make up 9% of the fund’s profile, utilities (8.7%) and energy industry (4.6%), and healthcare (3.4%). EPF’s smallest exposure is in the technology sector with about 0.6%.


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