Battered share market sees EPF losing RM23b

Oil and gas stock PetChem is the worst hit stock in EPF’s investment value

by DASHVEENJIT KAUR / pic by MUHD AMIN NAHARUL

THE Employees Provident Fund’s (EPF) investment value in 219 public listed companies fell by as much as RM23 billion since January this year as the novel coronavirus pandemic hammers the stock market.

A check by The Malaysian Reserve yesterday showed that the total equity value of EPF’s stocks declined to RM135.6 billion compared to RM158.5 billion at the end of the fourth quarter of 2019, erasing a staggering RM22.9 billion in total value. Only 42 stocks posted an increase in investment value for EPF in the same period.

The local stock market, like all equities, had been battered after the coronavirus became a pandemic. The FTSE Bursa Malaysia KLCI (FBM KLCI) dropped to 1,280.63 points yesterday, the lowest in more than a decade.

This year alone, the index had shed 19.39% while against the one year return, it fell 21.05%.

The stock market has been going through its biggest fall since 2010 as investors scurried for safe haven instruments following the double threat of a coronavirus-driven global recession and the Saudi-Russia oil-price war.

Foreign investors dumped local equities as fears about the worsening worldwide economic slowdown. Saudi Arabia’s decision to increase oil production to drive Russia and the US out of the market sent further shockwaves into the equity markets.

The EPF’s 10 worst performing stocks in last three months are Petronas Chemicals Group Bhd (PetChem), Sime Darby Plantation Bhd, Public Bank Bhd, Tenaga Nasional Bhd (TNB), RHB Bank Bhd, CIMB Group Holdings Bhd, Hong Leong Bank Bhd, Malayan Banking Bhd (Maybank), Hartalega Holdings Bhd and Malaysia Building Society Bhd.

By industry sector, EPF’s largest current exposures are in the financials (38.4%) and consumer staples (14.9%).

The sector that took the heaviest beating was banking, with a total of RM7.75 billion decrease yearto-date (YTD).

Interest in banking stocks plummeted as world financial regulators cut interest rates to keep their economies floating.

Bank Negara Malaysia (BNM) had cut a total 50 basis points (bps) this year alone.

According to Bloomberg’s data, EPF’s stakes in Public Bank dropped the most, amounting to RM1.4 billion within the last three months, followed by CIMB Group (RM1.3 billion), Hong Leong Bank (RM1.24 billion) and Maybank (RM1.17 billion).

Oil and gas (O&G) stock PetChem was the worst hit stock with RM1.63 billion lost in EPF’s investment value since January 2020.

The EPF in early March raised its stake in the company to above 8%, comprising of 640.5 million shares in PetChem after acquiring additional 5.81 million shares. It is believed EPF bought the stake from PetChem parent company Petroliam Nasional Bhd. The state-owned energy firm reduced its shareholding in a few of its subsidiaries late last year.

The increase in stake has led the stock to surge in stock price but the oil price war dragged PetChem’s share price down by 34%. As of yesterday, the company is trading at RM4.30 a share, valuing the company at RM34.4 billion.