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Friday, January 2, 2009

EPF ready to snap up bargains

An Economic downturn is bad news for a lot of people but for the Employees Provident Fund (EPF), it is music to its ears.

The pension fund, which has more than RM330 billion of assets, is eager to snap up bargains, be it in the stock market or the property market.

"Patience is the name of the game, there's nothing clever about it. For long-term fund like us, this is the time that we have waited for," Johari Abdul Muid, deputy chief executive officer of investment, told Business Times and Berita Harian in an interview recently.

As the stock market had fallen some 40 per cent in 2008, the EPF had been buying more shares in companies like SP Setia Bhd, a developer, Petronas Gas Bhd, and Public Bank Bhd, Bursa Malaysia filings show.

Although the weak stock market could make it tough for the EPF to maintain its dividend payout for 2008, buying stocks at low prices now could also mean a windfall when the market recovers.

Earlier last month, the EPF said its third quarter investment income fell 60 per cent from the second quarter as it set aside more money to cover the lower value of its stock market investments.

The EPF has 23.4 per cent of its funds in stocks in the third quarter, the third-biggest asset class after government bonds, loans and corporate bonds.

"Everyone's expecting recovery in 2010. You should see some recovery maybe middle of next year (2009), end of next year (2009)," he said.

The EPF also wants to buy more properties, a segment of which its investment is far short of what has been recommended by consultants. It can invest up to three per cent of its total but has spent only one per cent.

"There's quite a number of buildings that will probably be up for sale soon. Things are tough and cash is tight. I expect more sellers than buyers," Johari added.

Johari said he has been sending out his staff to find "good properties" for the last two months. Surprisingly, the fund has not been approached by potential sellers despite it being a natural candidate as it is flush with cash.

"Maybe they don't see us as a property player," he said.

The EPF has bought several choice assets in recent years, notably Wisma KFC and the Sogo shopping mall in Kuala Lumpur. These have been delivering good rental returns while other properties offer the chance for redevelopment.

An example is the training academy for Malaysia Airlines in Kelana Jaya which it bought for RM145 million in 2007.

"We see the potential of that piece of land. It is perfect land for redevelopment," he said.

By Business Times (by Shahriman Johari)

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