Judul : Khazanah raps ‘misleading’ report on investment strategy
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Khazanah raps ‘misleading’ report on investment strategy
Sovereign wealth fund says given its need to reinvest for growth and national initiatives, the bulk of its returns are primarily channelled into reinvestments, not dividends.
PETALING JAYA: Sovereign wealth fund Khazanah Nasional has rubbished a report by a Singapore daily claiming that it is under pressure to show higher returns to boost government coffers.
It said the article titled “Khazanah feels the heat amid push to change its investment strategy”, published by The Straits Times earlier today, gave an inaccurate and misleading picture of its financial performance.
“This is principally due to its selective focus on a narrow and incomplete set of indicators of financial performance,” it said in a statement.
According to the report, there is a push by some within Prime Minister Najib Razak’s “vast circle of advisers” to change Khazanah’s investment strategy, especially since the fund’s managing director, Azman Mokhtar, is due to leave in mid-2019, after a 15-year run at the helm.
It said Khazanah had lost RM9 billion in value of public money over two years from 2014, and that its net worth adjusted (NWA) had dipped from RM111 billion to RM102 billion in the same period.
However, Khazanah said the NWA value of the portfolio had grown threefold or 207% from RM33.3 billion to RM102.1 billion from May 2004 to December 2016.
This translated to an annual compounded return of 9.3% per annum over the 13-year period, rather than just the 1% or 2.6% return implied by the article, it said.
“In addition, Khazanah’s audited shareholders funds have grown to RM37.8 billion as at Dec 31, 2016, from RM13.2 billion as at Dec 31, 2004, an increase of RM24.6 billion over the period.”
Khazanah added that the rate of total return as represented by NWA growth was in line with relevant benchmarks, in particular the FBM KLCI, which it said posted a total shareholder return of 9.4% per annum during the same period.
“Khazanah has a multi-pronged mandate that includes investing for growth and commercial returns – domestically and internationally – while also undertaking developmental and national initiatives.
“The range of returns of these initiatives vary widely from low or even negative returns for more developmental activities, to significantly higher returns for our commercial and international operations, averaging at the said 9.3% per annum NWA return.”
It said given that its mandate does not involve receiving any regular capital injections, as well as its need to reinvest for growth and national initiatives, the bulk of its returns were primarily channelled into reinvestments, not dividends.
“This need for a balanced re-investment strategy for growth, development and dividends is done in consultation and approval of the board of directors and the government.
“As Khazanah does not receive regular capital injections unlike most sovereign and sovereign-linked funds, it needs to ensure that its returns are achieved with an appropriate level of risk undertaken.
“A principal risk management measure in this regard is our asset cover (which measures assets over liabilities), which stands at 2.9x as at Dec 31, 2016.”
In addition, it said, Khazanah actively tracked other non-financial measures of performance including economic, strategic and societal indicators which were widely reported in its annual reports.
Regarding its leadership succession, meanwhile, it said Khazanah had a well-established and orderly succession process approved by the board of directors and in line with good institutional practices.
Khazanah lost RM9 bil in 2 years, under pressure to perform
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