Malaysia Sovereign Fund Seeking Hedges as Inflation Risks Rise

by BLOOMBERG / pic by MUHD AMIN NAHARUL

MALAYSIA’S sovereign wealth fund is betting on real assets and health care investments to help cushion it from inflation that’s forcing central banks around the world to raise borrowing costs and eating into longer-term returns.

“Inflation remains the biggest risk,” Khazanah Nasional Bhd managing director Amirul Feisal Wan Zahir  (picture) said in a Bloomberg TV interview Thursday. “Inflation is on the top of people’s minds at the moment,” and how governments and central banks react to it.

The 86 billion ringgit ($20 billion) fund has taken steps to build positions that can benefit during a period of uncertainty around the speed of monetary policy tightening, the 52-year old said in his first interview with a foreign media outlet after being appointed to run Khazanah in June last year.

“We do see real returns from investments lowering and this is factored into return expectations going forward,” he said. “We’re into health care, financial institutions that can benefit from this and making sure we’re also into real assets as well.”

Here are some other comments he made on Chinese investments and cryptocurrencies:

China

Khazanah has “significant exposure” to China and is “kind of overweight” on the market, he said, adding that China is a market that cannot be ignored by long term investors such as Khazanah. Still, valuations “look pretty low, but it is a bit uncertain now.”

Digital Assets

Khazanah will not be looking at investing in digital assets in the immediate term given its risk appetite and priorities, he said.

“This is an area that we are keeping watch, but I think we are monitoring particularly the innovation that is happening around the digital assets,” he said.