‘The decline is quite large due to the fall in the value of world equities.’
The Employees Provident Fund (EPF) reported gross investment income for the first quarter (Q1) ended March 31, 2022 a decrease of 17.83% to RM15.85 billion from RM19.29 billion a year earlier.
The contraction was due to a large decline in markets around the world and was confirmed by the EPF's Chief Executive Officer (CEO), Datuk Seri Amir Hamzah Azizan.
He commented that the EPF recorded a strengthening at the beginning of the first quarter of 2022, but the market slowly declined due to several factors resulting in low returns in bonds and equities.
Among the factors outlined by him were Russian-Ukrainian geopolitical tensions, inflationary growth and rising interest rates.
Please be informed that equity -generated earnings are the main income contributor to the EPF.
Looking at the EPF's balance sheet, equities contributed RM10.46 billion, representing 66% of the company's total gross investment income during the quarter.
Of this value, net investment income recorded RM9.37 billion and the remaining RM1.09 billion has been written down to achieve total net investment income of Q1 2022 at MR14.76 billion.
Footnote, written down is the EPF's policy on listed equity investments as a measure to ensure that the portfolio remains sound.
Meanwhile, fixed income instruments which include Malaysian Government Securities as well as loans and bonds contributed fixed income of RM4.75 billion, which was higher than RM3.89 billion last year.
For the coming quarter, the EPF is seen to be cautious in navigating downside risks flanked by post-epidemic problems, the effects of war, inflation, supply chain disruptions and tightening monetary policy.
However, Datuk Seri Amir remained optimistic about Malaysia's growth prospects following the reopening of the economic and social sectors.
