(Bloomberg) -- Malaysia’s largest state pension fund, Kumpulan Wang Persaraan Diperbadankan, said it is pausing its plan to invest more abroad as the central bank urges state firms to help support the local currency.
KWAP has sought to increase its foreign assets to 30% of its portfolio in the long term, top executives said at a briefing on Wednesday.
Given the recent pressure on the ringgit, “we decided to have a relook at how we split our deployment outside of Malaysia,” said Chief Investment Officer Hazman Hilmi Salahuddin.
Malaysia’s central bank has been encouraging state-linked firms and investment funds to repatriate foreign investment income and convert it into the local currency to buoy the ringgit, after it slid to a 26-year low in February. The coordinated efforts have helped to stabilize the currency, helping it to outperform Southeast Asian peers this year.
Still, the fund is committed to increasing the share of foreign investments in the longer term, with foreign assets accounting for 24% of its portfolio last year, up from 20% in 2022.
This year’s rally in Malaysian stocks is also encouraging the fund to pour more money into the local market, Hazman said.
“We hope this year will be a much better year than 2023,” he said. “And that’s mainly driven by the domestic market.”
KWAP is Malaysia’s biggest public sector pension fund for civil servants with a total fund size of 169.8 billion ringgit ($36.8 billion) in 2023, up 7.4% from the previous year. KWAP’s investments returned 8.2% in 2023, the fund said Wednesday.
Net income jumped to 9.7 billion ringgit, from 263 million ringgit in 2022, as global markets rebounded, according to the fund.
Chief Executive Officer Nik Amlizan Mohamed said at the briefing that she sees potential earnings growth in local public and private markets. Malaysia’s economic growth surpassed analysts’ expectations in the second quarter, expanding 5.8% from a year earlier, according to the nation’s advance estimates.
“We are just at the beginning,” she said. “I think it will go higher than what we’ve experienced in the past.”
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