KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will insulate itself by optimising its liquidity management and continuing to diversify its asset classes to further contribute to a more stable condition in the domestic financial market, says group chairman Tan Sri Dr Zeti Aziz.
“PNB has an important role to contribute to the financial market, and given the fact that we have inflow of funds from our unit holders, we can invest in new funds therefore we are diversifying our assets into better liquidity management,” she told reporters during a media briefing on PNB’s first half performance here yesterday.
The former Bank Negara governor said that the size of the local financial market is significant and Malaysia has a flexible exchange rate with the economy well adjusted to it.
This has created a more resilient economy, with the corporate sector showing greater activity and growing in capital inflows.
“The world recognises that Asia and Southeast Asian is a growth centre in the global economy so eventually funds will gravitate back,” she explained.
Zeti added that the fund is beginning to see many things happen in the economy that would prompt economic activity.
“We are dealing through a period where we see outflows, and this is the time when an institution like PNB steps in to contribute to stabilise the market condition, and that has been happening for over more than two decades.
“This is the resilience of our market,” she said.
Asked if she sees rising volatility in the current domestic market, she said: “Having observed the market for more than two or three decades, I don’t see this as being very significant volatility in relative terms.”
Earlier during the briefing, Zeti said as part of PNB’s focus for 2019, the company’s diversification strategy would be accelerated across asset classes in order to optimise returns and minimise risk exposure.
As a result of this initiative, PNB’s portfolio allocations into fixed income securities and global assets have risen to 7.4 per cent and 4.9 per cent respectively at the end of May 2019, from 5.8 per cent and 2.4 per cent in 2017.
PNB is also developing a comprehensive outsourcing framework to complement its internal capabilities in the investments in new asset classes and markets.
It would allow the fund to explore new investment strategies and find alternative investment instruments, she said, noting that PNB’s existing Enterprise Risk Management Framework will also continue to evolve to manage the emerging risks amidst the changing landscape.
“Although the prevailing market environment has been reflected in the income distribution levels, PNB continues to navigate the short-term volatility with unwavering focus on the medium and longer term fundamentals.
“Amidst uncertain times, PNB will continue to invest consistently and not allow short-term volatility to obscure the potential returns over the longer term,” she added.
Meanwhile, chief executive officer Datuk Abdul Rahman Ahmad said despite the volatility, the fund also sees an opportunity to monetise its investment when the market is high.
“The key is how do we enhance the earning performance of our underlying companies? For example this year we would likely be affected by the lower commodity prices as well as challenges in the property market.
“But over time, with the domestic market being resilient, our financial institutions, whereby our largest investment is in Maybank, we expect them to actually perform.
“So it’s very important for us to work with our strategic companies and core companies so that they perform and improve our earnings growth,” he said. – Bernama