Malaysia's sovereign wealth fund aims for a more resilient portfolio in volatile markets

Malaysia’s sovereign wealth fund, Khazanah Nasional, is actively seeking to enhance the resilience of its investment portfolio in the face of volatile markets. The managing director of Khazanah Nasional, Amirul Feisal Wan Zahir, stated that the fund is focused on rebalancing its portfolio to better navigate market fluctuations.

Khazanah’s net asset value experienced a 5% decline to 81 billion ringgit ($17.4 billion) in 2022, largely influenced by global market downtrends. With over half of its portfolio invested in public markets, the Kuala Lumpur-based fund is taking measures to increase its stability and adaptability to market uncertainties.

According to the managing director of Malaysia’s sovereign wealth fund, Khazanah Nasional, the fund is adjusting its investment portfolio to enhance resilience in the face of market volatility.

In March, Khazanah Nasional reported a 5% decline in its net asset value, amounting to 81 billion ringgit ($17.4 billion) compared to the previous year. The fund attributed this decline to global market downtrends. Based in Kuala Lumpur, Khazanah Nasional allocates over half of its portfolio to investments in public markets.

Amirul Feisal Wan Zahir, the managing director of Khazanah, expressed during an interview with CNBC at the Energy Asia conference in Kuala Lumpur that their focus is on enhancing market resilience.

He further mentioned that they are currently in the process of rebalancing their portfolio, taking into account the market’s volatility.

In 2022, Khazanah recorded a net profit of 1.6 billion ringgit ($343 million), surpassing its net profit from the previous year. This marked the fourth consecutive year of net profit following a significant decline in 2018.

While the MSCI World index experienced a decline of over 18% in 2022, and the MSCI Emerging Markets index plunged 20% during the same period, Khazanah’s performance showcased relative resilience.

By the end of 2022, Khazanah reported that 55.9% of its portfolio was allocated to public markets within Malaysia, while 13.4% was invested in overseas public markets. Additionally, nearly a quarter of its portfolio was dedicated to private markets, with over half of those investments located outside Malaysia, and 8% of the portfolio was allocated to real assets.

Amirul Feisal highlighted the potential for asset deployment and investment opportunities in a volatile market environment.

Amirul Feisal further elaborated that given the present circumstances of industrial consolidation and the likelihood of increasing interest rates, companies, especially those in the consumer or highly leveraged sectors, could experience challenging conditions.

Despite multiple interest rate hikes by central banks aiming to rein in years of super-easy monetary policy after the 2008-2009 financial crisis, global inflation rates have remained persistently high. This, coupled with rate hikes and rising yields, has adversely affected numerous companies.

Amirul Feisal highlighted the need for CEOs and corporates to find ways to reduce costs in the current market environment. He suggested exploring opportunities in areas like business services, which could also present potential in the private equity sector.



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By Ryan

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