Friday, December 4

Khazanah’s long-term plan is solid, losses due to external factors

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Khazanah’s current business plan under the new government is already solid and intact for the sovereign wealth fund’s long-term performance, says an analyst. — AFP photo

KUALA LUMPUR: Khazanah Nasional Bhd’s current business plan under the new government is already solid and intact for the sovereign wealth fund’s long-term performance, says Phillip Capital Management Malaysia senior vice-president (investment) Datuk Dr Mohd Nazri Khan Adam Khan.

He said despite recording losses in the 2018 financial year, Khazanah’s plans, going forward was in the right direction and should be convincing and solid enough to return to profitability.

This should include dividing Khazanah’s assets into commercial and strategic assets, as well as, divesting more non-strategic assets.

”Khazanah is not the only sovereign wealth fund that incurred losses (in 2018), even the biggest sovereign wealth fund such as the Norway government pension fund also suffered the same fate, losing some US$57 billion.

“In my opinion, the main reason Khazanah recorded losses is due to the volatility in the equity market that was notable across the board especially with the trade tension between the United States and China looming in the background. Bursa Malaysia continues to trade flat at the moment,” he told Bernama.

Khazanah recorded a pre-tax loss of RM6.271 billion in 2018 versus a pre-tax profit of RM2.90 billion chalked up in 2017, the first losses suffered in a decade.

Profitability was affected by fewer divestments, reduced dividend income and higher impairments as a result of unfavourable market conditions during Khazanah’s transition period.

Nazri said the priority now was to support government economic initiatives by giving more cash to the government by way of divestments or reducing more equity in government-linked companies.

“What matters here is positive governance, transparency and prudent investment practice and ensure that Khazanah is free from political interruption. It (management) should be in the hands of professionals.

“I think that Datuk Sharil Ridza Ridzuan (Khazanah’s managing director), being the former chief executive officer of the Employee Provident Fund, knows how to manage Khazanah as an active institutional investor,” he added. — Bernama