KUALA LUMPUR: Permodalan Nasional Bhd (PNB) plans to increase its investments in international equities of developed and emerging economies, such as in the US, Europe and Asia.
PNB group chairman Tan Sri Dr Zeti Akhtar Aziz said its global diversification strategy for its flagship fund Amanah Saham Bumiputera has yielded positive results, with international public equity generating the highest returns at 11.6%, contributing 72.5% to its gross income as at November 2019.
“Had we not diversified into international markets, it’d have been even more challenging to generate returns,” she said at a media briefing today.
PNB’s portfolio diversification is well under way, with judicious deployment into global assets and increased exposure into fixed income.
As at November 2019, PNB’s portfolio consists of domestic public equity (72.1%), cash (19%) fixed income (4.2%), international public equity (3.6%), real estate (0.7%) and private investment (0.3%).
“While it (international equities) generate higher returns, it is subject to higher volatility. No market is immune from these increased volatility because of global developments taking place. Aside from financial and commodity markets, geopolitical developments also have significant implications on economies and financial markets so we have to be cautious in the process of diversification.
“We better manage our liquidity (cash holdings) so that we generate a higher rate of return as a result of better liquidity management,” Zeti said.
PNB president and group CEO Jalil Rasheed said its international geographical exposure as at November 2019 has increased to 8.3%, compared with 3.1% a year ago.
“Going forward, we will continue to increase our overseas exposure,” said Jalil, adding that it is deploying more cash into international public equity, real estate and private investments.
Nevertheless, as domestic equities remain central, he said the value of strategic companies needs to be enhanced, while more engagement needs to be undertaken with core companies.
Next year is expected to be a challenging one, given the prolonged economic uncertainties and market volatility.
Meanwhile, a mid-term review of its strategic plan 2017-2022 was undertaken during the year, enabling PNB to reinforce its key focus areas namely strategic asset allocations and optimal liquidity management, enterprise risk management and organisational transformation.
Zeti said the asset allocation focus entails intensifying its diversification process judiciously, looking at new opportunities, recycling capital for new investment opportunities, both in domestic and international financial markets.
Moving forward, PNB aims to accelerate its diversification strategy across all asset classes, as well as ongoing value creation plans for its strategic and core companies.
Zeti said it will continue to strengthen its investment portfolio in this challenging period via its diversification strategy, tighter risk management and enhancing internal capabilities through a progressive organisational transformation plan.
“Our investments will be geared towards capturing new opportunities and meeting our challenges in 2020 and beyond,” she added.
