KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will begin investing in the equity markets of several advanced and emerging markets within the medium term as part of its portfolio rebalancing exercise.
Speaking at its financial year 2018 (FY2018) results briefing, president and chief executive officer Datuk Abdul Rahman Ahmad said the group had identified six global funds managers that could be enlisted in this endeavour.
“Unfortunately, I can’t reveal the names of these six firms now, but what I can say is that actual equity investment takes up to three years and though we can finalise everything this year, it won’t be until the next three years that we can take up equity allocation,” he said.
“We would like to make the most prudent investment with the best returns for our stakeholders and because of this, we have to take a number of things into account. Yes, it does takes time, but we want to be as careful as possible.
”It should be noted that three years from 2019 is 2022 therefore coinciding with the end of PNB STRIVE-15 Strategic Plan 2017-2022.”
PNB STRIVE-15 comprises three pillars — enhancing sustainable returns, effective investment management and driving operational excellence.
Chairman Tan Sri Zeti Akhtar Aziz said the markets that PNB was looking at were the advanced economies of the United States, Europe, United Kingdom and Japan, while the emerging economies were mainly from Asia and Europe.
Following up on Rahman’s statement, Zeti said timing was incredibly important.
“Yes, we are interested to enter these markets. However, we do still need to build up our expertise in a gradual manner. “Timing at the entry level is very important and we don’t want to rush in and risk losing our investment,” she said.
Zeti said PNB was also looking at other types of instruments and market segments.
“Strategy going forward is to diversify our portfolio both within the domestic and international markets.
“We have been blessed to have one of the strongest bond markets in Asia in terms of structure and maturity,” she said.
“Right now we have five or six per cent in the domestic bond market, but we are looking at diversification into different segments such as real estate investment trust (REIT).
“However, these proposals must first be approved by PNB’s investment committee.
Rahman said PNB had not been approached to be a major investor in the Pakatan Harapan government’s proposed airport REIT.
“We have not been approached to invest in the airport REIT and we also have not been updated about it,” he said.
Announced by Finance Minister Lim Guan Eng during the tabling of Budget 2019, the proposed airport REIT would be the first of its kind in the world with an expected yearly return of RM700 million.
Zeti said the group’s portfolio diversification was ongoing with its cash position reduced to 17.4 per cent by redeploying it to fixed income.
“We are progressing well in our cash reduction as cash does not give us the returns that we want, while our international diversification is gathering pace with global assets now representing 3.3 per cent of the portfolio,” she said.
As of last year, PNB’s portfolio comprised of public equity at 70.8 per cent, private investment (2.2 per cent), real estate (2.8 per cent), cash and money market (17.4 per cent), fixed income (6.5 per cent) and others (0.3 per cent).
Most of its investments, 96.7 per cent, are still domestic with the remaining 3.3 per cent in overseas markets.