Institutional funds throw lifeline to lift KLCI

EPF, PNB, KWAP and TH have been buying various big-cap counters on the local stock market


GOVERNMENT-LINKED funds have been actively buying blue chips this month, thus providing support to the faltering stock market amid the rapidly-evolving Covid-19 pandemic.

Institutional funds like the Employees Provident Fund (EPF), Permodalan Nasional Bhd (PNB), Retirement Fund Inc (KWAP) and Lembaga Tabung Haji (TH) have been buying various big-cap counters as the rout and volatility on the local stock market continues.

EPF, in the third week of March alone, has bought some 68.8 million stocks in various counters on the FTSE Bursa Malaysia KLCI (FBM KLCI), according to Bloomberg data and Bursa Malaysia filings.

The retirement fund bought an additional 12 million shares in CIMB Group Holdings Bhd on March 16, 2020.

EPF now has an accumulated 1.43 billion shares in the country’s second-largest lender by assets.

It also bought five million and three million shares in Petronas Chemicals Group Bhd (PetChem) and Public Bank Bhd, bringing its total shares in both counters to 674 million and 598 million, respectively. Bursa Malaysia filing last week also revealed that EPF has been buying into Tenaga Nasional Bhd, Nestle (M) Bhd, Aeon Co (M) Bhd, Sime Darby Bhd, IOI Properties Group Bhd, Westports Holdings Bhd and Cahya Mata Sarawak Bhd to name a few.

PNB, the country’s largest asset management company, through its unit trust funds like Skim Amanah Saham Bumiputera (ASB) have bought some six million shares in seven of the blue-chip stocks.

ASB largely acquired three million shares of Malayan Banking Bhd’s (Maybank) shares on March 24 and one million of Sime Darby Bhd on March 20.

Meanwhile, KWAP’s buying appears milder than the rest with just 4.41 million additional index-linked shares acquired this month.

The civil servant pension fund’s largest number of shares acquired were also in CIMB Group, a total of three million on March 19, 2020, followed by Maybank (732,500) and Telekom Malaysia Bhd (680,000 shares) on March 24, 2020.

As for TH and Khazanah Nasional Bhd, both were not seen increasing its stake in any of the FBM KLCI counters they own.

Last Friday, the FBM KLCI closed 1.13% or 15 points higher to 1,343.09, following the announcement of the RM250 billion economic stimulus package.

The stimulus measures meant to boost the local economy further in light of the Covid-19 crisis was a boost to the market since the first stimulus package worth RM20 billion missed the window to be translated to market optimism due to the local political instability. Last Friday’s gain marked its third straight day of increase.

A total of 18 shares in the benchmark index rose, while eight fell.

Hong Leong Financial Group Bhd contributed the most to the index gain and had the largest move, increasing 4.29%, while IHH Healthcare Bhd was the biggest drag on the index and had the big- gest drop, declining 1.49%.

So far last week, the index rose 3.1%, heading for the biggest advance since the week ended May 31, 2019.

Recently, The Malaysian Reserve compiled data showed 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.

Ironically, those three stocks mentioned above were among EPF’s 10 worst-performing stocks in the last three months.

According to Bloomberg, 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).

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

Market benchmark, FBM KLCI, has dropped 15.46% year-to-date (YTD) and 18.24% year-on-year and is trading at decade lows.

The local market has lost RM291.15 billion in market value since January this year as foreign funds outflows, YTD, amounted to RM7 billion.