Aug. 30 (Bloomberg) -- Kumpulan Wang Persaraan (Diperbadankan), Malaysia’s second-biggest pension fund, said it has been a net buyer of the country’s stocks and bonds as foreign investors cut their holdings in Southeast Asia.
The retirement scheme, also known as KWAP, manages more than 91 billion ringgit ($27 billion) of assets and is favoring energy, banking and consumer stocks, Chief Executive Officer Wan Kamaruzaman Wan Ahmad said in an interview in Kuala Lumpur yesterday. The benchmark FTSE Bursa Malaysia KLCI Index has fallen 5.1 percent from its July 24 record and the ringgit slumped 5.3 percent this year, data compiled by Bloomberg show.
“The market is always fickle-minded,” Wan Kamaruzaman said. “Can the fundamentals of a country change in four months? I don’t think so.”
Thailand’s Government Pension Fund and Indonesia’s state retirement scheme PT Jamsostek have also said they bought local equities during the recent regional market rout, triggered by concerns over the U.S. potentially tapering its monetary stimulus. The three Southeast Asian funds manage a combined $59 billion of assets.
The KLCI index traded for 14.9 times earnings estimates for the next 12 months on Aug. 28, the lowest level since April, and was valued at 15.2 times today, according to data compiled by Bloomberg.
Yields on 10-year Malaysian government bonds have climbed 68 basis points to 4.06 percent since Prime Minister Najib Razak was re-elected in May, while the ringgit slid 8.1 percent against the dollar over the same period.
The MSCI Southeast Asia Index has dropped 19 percent from this year’s highest close on May 8. Global funds have withdrawn about $44 billion from emerging-market stock and bond funds since the end of May through last week, according to EPFR Global, a Cambridge, Massachusetts-based firm that tracks fund flows.
The KLCI was 0.9 percent higher as of 12:30 p.m. break in Kuala today, while the ringgit rose 0.4 percent to 3.3012 per dollar, according to data compiled by Bloomberg.
The currency’s fair value should be 3.10 to 3.20 against the dollar as the country is backed by strong foreign exchange reserves, Wan Kamaruzaman said.
“The decline in the regional market is a short-term capital flows issue and not fundamentals,” Wan Kamaruzaman separately told reporters in Kuala Lumpur today. “Although some of the markets are in negative territory, I’m not alarmed. At this juncture, I have not changed my view that fundamentals are still solid.”
Malaysian government officials said yesterday they plan to delay infrastructure projects, cut subsidies and may start a consumption tax, seeking to contain the budget deficit and bolster a shrinking current-account surplus. The central bank this month cut its economic growth forecast for 2013 to between 4.5 percent and 5 percent, from as much as 6 percent previously.
--Editors: Barry Porter, Mike Patterson