First Nine Months of 2023 Saw a 33 percent Increase in EPF Investment Income to RM47.86bil

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For the nine months that ended on September 30, 2023 (9M23), the Employees Provident Fund (EPF) reported total investment income of RM47.86 billion, which is 33% more than the RM36.04 billion reported for the same period in 2022.

EPF stated in a statement that the amount was after netting off listed equity write-downs recorded for the period.

Of the total income received from investments, RM47.86 billion, RM4.62 billion came from mark-to-market (MTM) gains on securities that have not yet been realized.

The foreign exchange rate fluctuations were the primary cause of the MTM gains. After deducting write-downs, the total investment income for the third quarter that concluded on September 30, 2023 (3Q23) was RM14.67 billion. The amount was RM2.38 billion more than the RM12.29 billion recorded during the same period in 2022.

According to EPF’s chief executive officer, Datuk Seri Amir Hamzah Azizan, global equities posted a negative return in the third quarter, which was a considerable departure from the robust gains that the market saw in the first half of the year.

He went on to say that there will certainly be uncertainty and market volatility due to the ongoing conflict between Russia and Ukraine and the Gaza-Israel war.

“We anticipate geopolitical risks will continue to amplify the already turbulent economic situation.” In addition, market sentiment changed in a variety of ways due to a number of factors, including growing energy prices, growing government bond yields, and worries about the state of China’s economy in light of the possibility of an extended period of high interest rates.” The US’s AAA rating was downgraded to AA+ by Fitch Ratings in August 2023, which was a noteworthy event. The rising debt load, which highlights the difficulties facing the world economy, served as the impetus for this action, the speaker stated.

Additionally, according to Amir Hamzah, the sharp rise in sovereign yields was the main cause of the third-quarter 2023 negative total returns seen in the global fixed income markets.

He pointed out that the narrative of “higher for longer” policy rates and robust economic data had an impact on the increase in government bond yields because inflation moderation was slower than anticipated.

According to him, these changes have given rise to a new facet of the world economy, one that calls for the EPF to adopt a watchful and flexible strategy as we negotiate the financial system.

With RM9.17 billion produced after deducting write-downs, equity investments continued to be a major source of investment income, making up 63% of all investment income in 3Q23.

The fund managers’ proactive approach to realising capital gains at the start of the quarter, which saw some equity indices record their best year-to-date performance, especially for developed markets, is responsible for the increase in income when compared to the RM5.89 billion recorded in 3Q22.

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