FT: Steady Bursa in stormy economy reveals EPF’s supporting role: KUALA LUMPUR, Sept 30 — The Bursa Malaysia went unscathed when other emerging markets slumped over fears the US Federal Reserve would cut back on stimulus, but this exposed the extent to which pension funds and other such institutions prop up the market, the Financial Times said. While other markets slumped into negative territory on rumours that the Fed was “tapering” its US$85 billion (RM280 billion) a month bonds buying programme, the Malaysian exchange defied gravity and stayed flat throughout. “With so many emerging markets still considered risky even after the Fed postponed its tapering threat, Malaysia could look like a haven. But it is not, really,” the London-based business paper said today. Despite noting the hive of activity such as the impending Westports Holdings market listing and another by UMW Oil and Gas due soon after, it said the Bursa Malaysia’s comparative performance was more indicative of the forces propping up the bourse. “Malaysia’s market is still dominated by a handful of local fund managers whose steady ringgit inflows are put to work in local assets. “Employees Provident Fund (EPF), the government-managed mandatory pension fund for private sector workers, holds at least a 10th of each of Malaysia’s five biggest companies. That makes it a top two investor,” it noted. Such dominance by a handful of local funds helped provide a buffer against the vacillations of the global economy, the FT said, but was also a deterrent to foreign capital inflows that could be used as a barometer of investor confidence. This could hamper Putrajaya’s efforts to encourage private firms to become the key driver of the economy as its funds continue to be constricted by its promised effort to slash the country’s chronic budget deficit to 3 per cent by 2015. Malaysia has steadily watched federal funds and government-linked companies become an overbearing presence locally since the Asian Financial Crisis, after government sought to reinforce these against a repeat of the 1997 event. The EPF is the mandatory retirement savings fund for workers in the private sector and is estimated to control over RM500 billion in contributions at the end of 2012. As of March 31, 2013, a total of 13.69 million members were registered with the EPF, out of which 6.41 million are active members contributing to their retirement savings compared with 13.26 million members with 6.28 million active members recorded in the same quarter in 2012. According to the Bursa Malaysia website, the FBM KLCI index gained 2.00 points or 0.11 per cent on Friday. The Finance Index increased 0.53 per cent to 16577.82 points, the Properties Index dropped 0.35 per cent to 1339.76 points and the Plantation Index down 0.37 per cent to 8318.74 points. The market traded within a range of 6.26 points between an intra-day high of 1781.61 and a low of 1775.35 during the session. dlvr.it/43N0H9
Posted on: Mon, 30 Sep 2013 03:00:36 +0000