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EPF's total investment income decreased 21pc to RM27bil for 1H 2022

EPF said the weaker investment income recorded during the period was caused by the market's reaction to the elevated risk of both slower global growth and high inflation, not experienced by major economies since the 1970s.

KUALA LUMPUR: The Employees Provident Fund's (EPF) total investment income decreased 21 per cent to RM27 billion for the first half (1H) of 2022 from RM34.06 billion in the same period in 2021.

In a statement today, EPF said the weaker investment income recorded during the period was caused by the market's reaction to the elevated risk of both slower global growth and high inflation, not experienced by major economies since the 1970s.

Underlying these risks include the protracted Ukraine-Russia conflict, which disrupted global supply chains that sent prices soaring, a rise in global inflation rates, hitting multi-decade highs and in-step interest rate hikes by numerous central banks, partly in response to US Federal Reserve rate hikes and partly to reel in inflationary pressures.

EPF noted that these risks had been flagged at the beginning of the year, but the rate at which they materialised was unprecedented, like the magnitude and speed of US Federal Reserve rate hikes.

"All these factors have intensified and resulted in most markets posting their worst 1H of a year in decades, with US stocks recording their worst in more than 50 years," EPF said in a statement today.

Not insulated from global market events, the EPF's total gross investment income for the second quarter (Q2) of 2022 was RM11.14 billion, down RM3.63 billion from the RM14.77 billion recorded in the same quarter last year.

Equities continued to be the main contributor of income for Q2 2022 at RM4.88 billion, accounting for 44 per cent of the total gross investment income in the quarter under review.

EPF chief executive officer Datuk Seri Amir Hamzah Azizan said expectations of global growth have suffered, which caused a persistent sell-off in the global markets.

"The consistent downtrend impacted EPF's equity earnings, especially through global stock markets, which declined between 17 per cent and 21 per cent during the 1H of 2022.

"Nonetheless, the EPF's diversification into different asset classes, markets, and currencies, as prescribed in its Strategic Asset Allocation (SAA), has helped the EPF to remain resilient against turbulent market conditions and to protect its long-term investment returns," he said.

Amir said EPF is keeping a positive outlook on the home front and believes that Malaysia's economic recovery will continue further for the remainder of 2022, following stronger gross domestic product growth of 8.9 per cent for Q2.

He said the EPF remains cautious about key risks that continue to rattle markets and investor sentiment, such as soaring global inflation rates, geopolitical tensions, and tightening monetary policies.

"Markets are still very volatile, and while we are deeply concerned by these developments, we maintain our long-term and balanced approach in our investment decisions as there are pockets of opportunities which we can capitalise on during this challenging time.

"As a retirement fund, the EPF's overarching strategy focuses on the long-term sustainability of our investments and returns.

"We will take all necessary measures to ensure our financials remain strong and resilient to be able to withstand any volatility risks and short-term challenges," he added.

https://www.nst.com.my/business/2022/10/838270/epfs-total-investment-income-decreased-21pc-rm27bil-1h-2022

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