What happens when Malaysia’s companies received investments from the world’s largest sovereign wealth fund?
Around 145 Malaysia-listed companies are receiving investment from Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund with a market value of about NOK11.08 trillion (RM5.48 trillion). Among them are Mr. DIY Group (M) Bhd, Top Glove Corps Bhd and Genting Malaysia Bhd.
As of December 31, 2020, the bank’s asset management unit, Norges Bank Investment Management which has been tasked to manage the Government Pension Fund Global (aka Norway’s oil fund) has the following Malaysian holdings:
- Bumi Armada Bhd: 3.28%
- Bursa Malaysia Bhd: 2.59%
- Alliance Bank Malaysia Bhd: 2.59%
- Top Glove: 0.89%
- Carslberg Brewery Malaysia Bhd: 0.74%
- Genting Malaysia: 0.7%
- Nestle (Malaysia): 0.35%
- AirAsia X Bhd: 0.30%
- Mr DIY: 0.26%
Additional Revenue
The fund currently owns almost 1.5% of all shares in the world’s listed companies, that is around 9,000 companies, allowing them to receive a small share of these companies each year. They also owns hundreds of buildings in major cities around the world and these generate rental income.
The fund also receives revenue from oil and gas production, even though these deposits accounts amount to less than half the value of the fund. They are mostly earned from investing in real estate, equities, and fixed income.
The fund also receives a steady flow of income from lending to countries and companies. By spreading our investments widely, we reduce the risk of the fund losing money.” ~Norges Bank Investment Management
Impact of Covid-19 on financial markets
According to them, the pandemic in 2020 has cause a drastic changes of working conditions and some large and sudden movements in financial markets.
” The investments in the Government Pension Fund Global nevertheless returned 10.9 per- cent in 2020, which is 0.27 percentage point more than the return on the benchmark index the fund is measured against. The executive board is pleased that a solid excess return was achieved in a turbulent year,” – Norges Bank Investment
Their investments are limited to companies listed on regulated exchanges and when the board of the company intends to apply for listing on an exchange.
The FTSE Global All Cap stock index is the indicator of the fund’s equity investments and the benchmark used by Norway’s Ministry of Finance.
The Fund had invested in 146 companies in Malaysia in 2019 compared to 152 in 2018. The 2019 list also includes Bumi Armada, Bursa Malaysia, Malayan Banking Bhd, Petronas Gas Bhd, Top Glove, and Air Asia Group Bhd.
Overall
Investment news such as this gives reassurance to foreign investors that the Malaysian market is still an excellent choice to invest in. The Malaysian government should also pay attention to what else can be done to attract foreign investors to increase their investment inside the country in order to propel the economy further.
What is your opinion on our current foreign investment in Malaysia?
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