Amir Hamzah said the accelerating rollout of Covid-19 vaccines and reopening of economies had supported a stronger performance for equities in the developed markets.
“However, equities in the emerging markets were more muted, due to the resurgence of Covid-19 in Southeast Asian countries and tighter regulations imposed by China authorities on several sectors that had triggered a sharp decline in stock prices,” he said in a statement.
The EPF recorded RM14.77 billion gross investment income for the second quarter (Q2) of 2021, RM0.35 billion lower than RM15.12 billion in the same quarter last year.
Equities continued to be the main contributor of income for Q2 2021 at RM7.89 billion, accounting for 53 per cent of total gross investment income.
EPF said as part of its internal policy to ensure a healthy portfolio, it had adopted cost write- downs on listed equities.
“In Q2 2021, RM0.21 billion was written down for listed equities, compared to RM1.66 billion in the same quarter in 2020 following the continued recovery across global markets.
“After netting off these write-downs, a total of RM14.56 billion of investment income was recorded in Q2 2021, eight per cent higher than the RM13.46 billion recorded in 2020,” it said.
Meanwhile, the EPF’s fixed income instruments continued to contribute a stable income of RM5.28 billion, or 36 per cent to the gross investment income in Q2 2021.
This was lower compared to the RM6.17 billion recorded in Q2 2020 due to lower trading gains, the EPF said.
The EPF’s diversification into different asset classes, markets and currencies continued to provide income stability and added value to its overall return.
As at end June 2021, its investment assets stood at RM989.14 billion, of which 37 per cent was invested overseas.
In Q2 2021, overseas investments generated an income of RM8.71 billion, 59 per cent of the total gross investment income recorded.
For the remaining half of the year, Amir said the country’s recovery prospects were dependent on how the Covid-19 situation plays out in the near term.
He said the EPF was concerned about the retirement security of the people, especially with 46 per cent of its members below the age of 55 having less than RM10,0002 in their account.
“The pandemic has led to a significant drop in the percentage of members meeting the basic savings threshold (RM240,000 at age 55) from 36 to 27 per cent, pursuant to the Covid-19 related withdrawals to supplement their income during the crisis.
“The pandemic has also triggered a dramatic rise in the number of gig workers in the country, and while that has helped workers survive, many of these workers are falling back on their retirement security due to the irregular and unstable income,” he said.
Amir Hamzah said there would be far-reaching repercussions not only on the EPF members’ future well-being, but also on the government, which would have to carry that financial burden.
“The key element of the EPF’s strategy going forward is to get the gig workers, as well as those in the informal sectors, into the EPF scheme so they can start to save as early as possible and plan for their retirement,” he said, adding that a coordinated solution for the longer term is needed to ensure better social protection for all Malaysians.
As the country recovered from the crisis, Amir Hamzah said the EPF’s focus was to help members restore and rebuild their retirement savings to ensure that they were able to secure a dignified retirement.
“We will remain focused on our strategic asset allocation and continue to be cognisant of the risk profiles of the markets as they develop so we are able to shift along the way.
“While we are doing that, our fundamental purpose of providing returns and protection for our members’ future well- being will continue to be preserved,” he added.
© New Straits Times Press (M)