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Malaysian sovereign wealth fund Khazanah Nasional is rebalancing its investment portfolio to better withstand market volatility, its chief executive said.
Khazanah’s net asset value fell 5% to 81 billion ringgit ($17.4 billion) in 2022 from a year ago, hit by downward trends in global markets, the fund said in March. The Kuala Lumpur-based fund invests more than half of its portfolio in public markets.
“What we are focusing on here is looking at how we can be a little bit more resilient in the market,” Khazanah general manager Amirul Feisal Wan Zahir told CNBC on Monday on the sidelines of the Energy Asia conference in Kuala Lumpur.
“Looking at the volatility in the market, we are still rebalancing our portfolio,” he added.
According to Managing Director Amirul Feisal Wan Zahir, Malaysian sovereign wealth fund Khazanah Nasional is strengthening its investment portfolio to be more resilient in volatile markets.
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Khazanah posted a net profit of 1.6 billion ringgit ($343 million) in 2022 – more than doubling its net profit from the previous year and a fourth consecutive annual net profit after an unprecedented plunge in 2018.
In comparison, the MSCI World Index fell by more than 18% in 2022 and the MSCI Emerging Markets Index fell by 20% over the same period.
At the end of 2022, Khazanah said 55.9% of his portfolio was invested in public markets in Malaysia, and 13.4% in public markets abroad. Almost a quarter of the portfolio was invested in private markets, more than half outside Malaysia, of which 8% in real assets.
“There is actually a lot of potential in asset deployment,” said Wan Zahir, pointing to investment opportunities in a volatile market environment.
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“Right now, if you look at industrial consolidation…or we know there’s a rising interest rate environment, and companies will be under pressure – especially if you look at consumer companies or highly indebted companies” , he said.
Inflation rates have remained persistently high worldwide despite multiple interest rate hikes, as central banks try to rein in super-loose monetary policy following the financial crisis of 2008-2009. Rate hikes and rising yields have combined to hurt many companies.
“But it does tell CEOs and companies: How can I actually reduce my costs?” said Wan Zahir.
“So if you look at areas like business services, you can get opportunities in private equity there as well.”
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