KUALA LUMPUR (Nikkei Markets) - Malaysia's state-run investment agency Permodalan Nasional Bhd is seeking to invest in higher-yielding assets and expand into other markets as part of its diversification strategy as prospects of hefty returns from its holdings at home look blurry for 2019.
PNB, which manages assets worth more than $70 billion, is preparing a mid-term review next year of its 2017 - 2022 plan, the company said in a statement. The review will concentrate on strategic asset allocation, risk management and organization transformation, PNB said.
"PNB will also continue with value creation plans for strategic companies and further engage with the core companies to improve their performance," the company said.
The Southeast Asian nation's largest asset manager holds substantial stakes in some of Malaysia's largest listed corporates such as top lender Malayan Banking and palm oil producer Sime Darby Plantation. The company also owns real estates in the U.K. and in Australia.
PNB recently signed a deal to acquire commercial properties under the second phase of Battersea project in the U.K. for 1.58 billion pound sterling ($1.99 billion). The joint acquisition with Malaysia's state-owned Employees Provident Fund is expected to be completed in the first quarter of 2019.
This year, PNB distributed some 15.1 billion ringgit in dividends and bonuses to its investors, about 3% higher than the total payout in 2017. Challenges, however, are mounting as PNB grapples with slowing economic growth in Malaysia and abroad amid trade tensions and volatile commodity prices.
PNB held "excessively high percentage of cash and there are many instruments at our disposal to manage liquidity more effectively," PNB Chairperson Zeti Akhtar Aziz said at a news conference. The company also had not invested much into fixed income markets, she said.
"The diversification will be in other markets, real estate, both financial and the real sector," Zeti said. "The diversification will be across the board."
The FTSE Bursa Malaysia KLCI posted negative returns in three of the past four years and is set to decline this year as well after shedding nearly 8% to-date amid lackluster corporate earnings and exodus of foreign funds that have weighed on the country's currency.
Next year, the ringgit is expected to strengthen to 4.10 against the U.S. dollar from 4.20 this year, said PNB Chief Executive Abdul Rahman Ahmad. Long-term metrics indicate that the ringgit is undervalued and the recovery in the ringgit will be underpinned by "healthy fundamentals," he said.