KWAP targets RM200b gross fund size by 2025, eyes private market 

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According to The Retirement Fund (Incorporated) (KWAP) CEO Nik Amlizan Mohamed, the fund plans to achieve RM200 billion target in total gross fund size by 2025 from RM159 billion currently through increasing its investments in the private market, which include equity, infrastructure and property domestically and internationally. It is seeing double-digit growth of return in the private market space while the return from the public market has not been on a high trajectory. Currently the fund’s asset allocation is towards the public market, that is listed equity as well as the fixed income space. Moving forward the focus is very much on the private market side. He was speaking at the launch of KWAP’s three-year programme Teras 5, which was officiated by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz. 

Currently, KWAP’s public and private investment portfolios are at 90% and 10% respectively. Through Teras 5, it plans to increase its private investments to 20% by 2025. KWAP intends to stretch the total return to 7% in three years from 6%, which was its return each year for the past 10 years. Teras 5 is part of the fund’s long-term plan to increase the size of the fund more effectively and sustainably and further strengthen its capability to benefit government retirees at present and in future. 

The programme is based on elevating five enablers, namely structure, governance, people, processes and digital to drive eight workstreams, including organisational structure, enterprise, investment, contribution and retirement services, digital, people and culture, corporate services, and risk, governance and oversight. The programme was entirely developed by the KWAP team with no involvement from external consultants. 

Foreign investors turned net buyers, partly lifting FBMKLCI in July – CGS-CIMB 

According to CGS-CIMB, foreign investors, which turned net buyers in July, helped contribute to the 3.3% month-on-month (m-o-m) gain of the benchmark FBMKLCI last month. The gain was also partly fuelled by expectation that concerns over a US recession may have been priced in after the recent market selloff. The research house noted that foreign investors emerged as net buyers in the local bourse after Bursa Malaysia witnessed an inflow of RM175 million from foreign funds across all Malaysian securities last month. The net buying by foreign investors comes after a RM1.3 billion net sell in the previous month which was also the highest monthly net sell since July 2021. In total, the cumulative foreign net inflows for the first seven months of the year (7M2022) amounted to RM6.3 billion, which is a stark contrast to the 7M2021 net sell of RM5.5 billion. Citing Bursa Malaysia statistics, sectors that attracted the highest foreign investment last month were financial services (RM237.63 million), healthcare (RM120.31 million) and utilities (RM53.12 million). Local retailers and institutional investors turned net sellers for July at RM16 million and RM41 million respectively. Local retailers 7M2022 net buy of Malaysian equities amounted to RM1.7 billion, compared to 7M2021 net buy of RM9 billion. As for local institutional investors, 7M2022 net sell amounted to RM7.9 billion, higher than the 7M2021 net sell of RM6.3 billion. On average daily trading value (ADTV), the broking firm highlighted ADTV in July fell 29% m-o-m to RM1.4 billion, representing the lowest monthly ADTV since December 2012. The average daily trading volume fell 20% m-o-m to 2.2 billion units in July. The market capitalisation of Bursa Malaysia’s main board grew 2.7% m-o-m to RM1.65 billion as at end-July, a smaller gain than the KLCI’s 3.3% m-o-m. Notably, at 3.3% m-o-m gain in July, the KLCI outperformed the MSCI All Country ex-Japan index. Among the benchmark indices of neighbouring countries, namely Indonesia, Singapore and Thailand, it was also the second best performing market in July after Singapore’s, which gained 3.5% m-o-m. For the month of August, the performance of the KLCI tends to be negative based on historical data, with average of -0.3% m-o-m returns over the past 10 years. It expects the KLCI to be range-bound in August, with possible downside risk if there are negative surprises from the earnings season. The 2Q22 results seasons have been mixed so far. On the market outlook, the key negative surprises during the results season so far came from glove makers, while REITs that reported results posted better-than-expected earnings. Its top three picks include Genting Malaysia Bhd (target price: RM3.30, MR DIY Group Bhd (target price: RM2.40) and RHB Bank (target price: RM7.70). 

Eye On The Markets 

This week, on Friday (5Aug), the Ringgit opened at 4.4565 against the USD from 4.4505 on Monday (1Aug). Meanwhile, the Ringgit was 3.2380 to the Sing Dollar on Friday (5Aug). On Monday (1Aug), the FBM KLCI opened at 1492.67. As at Friday (5Aug) 10:00am, the FBM KLCI is up 7.12 points for the week at 1499.79. Over in US, the overnight Dow Jones Industrial Average closed down 85.68 points (-0.26%) to 32,726.82 whilst the NASDAQ added 52.42 points (+0.41%) to 12,720.58. 

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