EPF records higher investment income of RM33.19bil for 1H 2023

Inve$t | Market Sentiments | 18 August 2023

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The Employees Provident Fund (EPF) recorded total investment income of RM33.19 billion for the first half of the year ended June 30, 2023 (1H 2023), an increase of RM9.44 billion, compared with the RM23.75 billion recorded in the corresponding period in 2022. The amount was after netting off listed equity write-downs recorded for the period under review. Of the RM33.19 billion, RM4.79 billion was generated from mark-to-market (MTM) gains of securities that have not been realised. The MTM gains were mainly due to fluctuation of foreign exchange rates. 

EPF’s total investment income for the second quarter (2Q 2023) was RM18.03 billion, up RM9.05 billion from RM8.98 billion recorded in the same quarter last year. Equity investments continued to be the main contributor of income for the second quarter at RM9.6 billion. Due to active portfolio management by EPF’s fund managers, write-downs for 2Q 2023 were minimal at RM0.35 billion, compared with RM2.15 billion recorded in the same quarter of 2022. 

According to EPF CEO Datuk Seri Amir Hamzah Azizan, the performance of the global equity markets in the first half of 2023 had been positive, led by a run-up in the developed markets, notably in the US which continues to show resilience despite the rise in interest rates. The EPF’s agility and adaptability in its investment strategy paved the way for the investment managers to take advantage and capitalise on the market rally, which contributed to the higher return from equities during the period. This is in contrast to the equity market performance seen in the first half of 2022, which saw several indices suffering significant declines, with most markets including the US posting their worst first-half performance in decades. 

For Malaysia, the 5.6% GDP growth in 1Q 2023 had surpassed expectations, driven mainly by firm domestic demand and improvement in the labour market. Resilient growth tempered tighter financial conditions, providing a floor for the domestic capital markets. Fixed income instruments, which serve as a capital preservation role, have been the anchor for EPF’s investment portfolio and continues to provide stability for the retirement savings fund’s overall income. This asset class, comprising Malaysian Government Securities and equivalents, as well as loans and bonds, contributed 27% or RM4.83 billion, to EPF’s total investment income for 2Q 2023. Real estate and infrastructure registered an income of RM2.72 billion, while income from money market Instruments generated RM0.88 billion, in line with the return expectations set for these asset classes. 

EPF’s assets recorded strong growth on the back of higher income generated from its investments as well as the healthy net contributions received. As at June 2023, EPF investment assets stood at RM1,082.45 billion, of which 38.6% were invested overseas. The increase in overseas exposure was largely in part due to positive movement in global markets, pushing valuations of EPF’s investment higher, as well as favourable foreign exchange movements. Excluding the movements of foreign exchange rates during the quarter, EPF’s overseas investments would have been around 37.5%. The fund’s overseas investments generated RM11.07 billion, or 61% of the total investment income recorded. 

Meanwhile, EPF’s domestic investments, which accounted for 61.4% of total assets, have grown by RM57 billion compared to one year ago. EPF remains dedicated to supporting and contributing towards strengthening the domestic market by allocating more than 80% of its new annual investments to domestic investment. 

During 2Q 2023, a total of RM16.27 billion out of the RM18.03 billion investment income was generated for Simpanan Konvensional and RM1.76 billion for Simpanan Shariah. Simpanan Shariah derives its income solely from its portion of the shariah segment while income for Simpanan Konvensional is generated by a share of shariah and conventional portfolios. 

As at 1H 2023, EPF membership has grown to 15.9 million. Of that, active members reached an all-time high of 8.47 million. 

ASNB eyes 1mil unitholders annually through TNGD’s GOinvest 

According to Permodalan Nasional Bhd (PNB) CEO Muzaffar Othman, PNB’s wholly owned subsidiary Amanah Saham Nasional Bhd (ASNB) expects to onboard more than one million unitholders yearly to invest in its unit trusts through its partnership with TNG Digital Sdn Bhd’s (TNGD) eWallet, GOinvest feature launched today. 

He said that ASNB has 12 million individual unitholders and 15 million unit trust accounts, while TNGD has about 21 million users. Through the partnership, it hopes to tap into the significant overlap between its unitholders and TNGD’s users. 

Speaking at the ASNB Investment feature on GOinvest launch event press conference, he said that ASNB does not have the numbers yet, however he hopes to onboard a million people annually from the big overlap. He added that ASNB will be the first and only eWallet agent to offer investments in its unit trusts for Malaysians through GOinvest Touch ‘n Go eWallet. The partnership is geared more towards financial inclusion and financial literacy to grow investment and to save for the future. He was hopeful that through this collaboration, there would be more unitholders coming in via this channel, enabling them to save and invest with ASNB.  

Meanwhile, according to Touch n’ Go Digital CEO Alan Ni, the introduction of ASNB to its growing financial services portfolio aligns with its commitment towards digital inclusion and making financial investment accessible for everyone. With a relatively low risk and long-term investment instrument, the users can save and invest with a consistent and competitive return on investment through ASNB. With an incredibly low minimum initial investment of just RM10, over 12 million ASNB unitholders can now effortlessly invest through GOinvest in the Touch ‘n Go eWallet. 

This innovative partnership further diversifies GOinvest’s offerings to a total of 26 unit trusts that caters to different risk appetites, while making online investments convenient and affordable for the masses. The partnership enables Malaysians to subscribe to all 17 ASNB unit trusts via the feature in the eWallet, which will complement the nine unit trusts that are currently available.  

Existing ASNB unitholders can now invest in ASNB unit trust through the feature such as checking portfolio performances and make new investments. New users are also encouraged to access their ASNB account through the eWallet for hassle-free investing once they have completed the easy online registration via the MyASNB app. For the second phase, new users from ASNB can expect to onboard themselves by the end of 2023 or Q1 of next year. 

In conjunction with the launch, TNGD and ASNB are running a “Labur Online Laju” cashback campaign between Aug 16 to Sept 30, to reward users who subscribe to ASNB Investment GOinvest in the Touch ‘n Go eWallet. 

Heineken Malaysia’s net profit up 5% in 2QFY2023 

(L to R) Heineken Malaysia’s Karsten Folkerts, Finance Director; Roland Bala, Managing Director,  & Renuka Indrarajah, Corporate Affairs and Legal Director 

Heineken Malaysia Berhad announced its financial results for 2Q and 1H FY2023 ended 30 June, reporting net profit growth amidst challenging market conditions leading to a decrease in sales. 

In the 2Q 2023, Group revenue decreased by 12% as compared to the same quarter in 2022, mainly due to lower sales attributed to weak consumer sentiment driven by rising cost of living and currency volatility. The Group had a strong base in the second quarter of 2022 as the market had an upsurge in sales (Revenue +84% versus the second quarter of 2021) following the re-opening of the economy and international borders at the start of the endemic phase. The Group views this quarter’s performance as a form of market correction. Group profit before tax decreased by 7% alongside lower revenue, mitigated by efficiency gains through cost and value initiatives. 

For 1H 2023, Group revenue was 2% lower, mainly due to the market correction as mentioned above, buffered by higher sales in the first quarter due to early Chinese New Year festive period in January 2023. In the period under review, persistent soft market sentiment has impacted the sales performance of the Group. Group PBT declined by 7% due to lower revenue and relatively higher promotional and marketing expenses as the Group continued to invest behind its brands. 

Commenting on the results, Roland Bala, Managing Director of HEINEKEN Malaysia, said, “1H 2023 remained challenging as the market goes through corrections following a huge rebound in 2022 and weaker consumer sentiments due to macroeconomic concerns. We remain focused on our EverGreen strategy to deliver long-term sustainable and superior growth.” 

On outlook, Roland shared, “In light of cautious consumer spending due to macroeconomic concerns, we anticipate the market to remain challenging. We will stay agile to the volatile business environment and continue to focus on our EverGreen strategy to future-proof our business. We will continue to drive efficiency through cost optimisation across the organisation while investing in our brands and innovations. In the absence of the one-off prosperity tax, we look forward to a positive impact on our group net profit this year.” 

In terms of challenges, the Group’s ongoing concern revolves around illicit alcohol. HEINEKEN Malaysia views illicit alcohol seriously and remains committed to supporting the authorities in addressing illicit trade through comprehensive efforts, which encompass bolstering enforcement measures and promoting greater awareness within the market. 

Eye On The Markets 

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