Malaysia’s Employees Provident Fund (EPF) painted a bleak global picture of geopolitical risks adding to economic storm clouds, in spite of seeing a near 20% rise in investment income in the third quarter.
Amir Hamzah, chief executive officer of Malaysia’s largest pension fund, pointed out that global stock returns turned negative in the three months to September after strong gains in the first half of 2023 amid concerns about the health of China’s economy, rising energy prices, higher bond yields, and a potentially extended period of high interest rates.
“The Gaza-Israel war and the ongoing Russia-Ukraine conflict will undoubtedly contribute to an atmosphere of uncertainty and market volatility. We anticipate geopolitical risks will continue to amplify the already turbulent economic situation,” he says in a statement on November 18, when the EPF published its third-quarter financial results.
The pension fund, which manages the retirement savings of private sector employees and the self-employed, reported gross investment income of 14.69 billion ringgit (US$3.15 billion) in the three months to September, up from 12.29 billion ringgit in the same period of 2022, mainly due to mark-to-market gains of stocks that had not been realised.
Equities accounted for 63% of the investment income, government bonds, loans and corporate bonds accounted for 32%, and the balance was from money market instruments, real estate and infrastructure.
The fund’s total gross investment income for the first nine months of 2023 was 47.86 billion ringgit, nearly one-third higher than the 36.04 billion ringgit reported in the same period last year.
Its total assets as of end-September were 1.09 trillion ringgit, up from just over 1 trillion ringgit at the end of last year.