Malaysia's Sovereign Wealth Fund Aims for Increased Portfolio Resilience Amid Market Volatility

Malaysia's Khazanah National Rebalances Portfolio for Market Resilience

Khazanah National's Investment Strategy

Khazanah National, Malaysia's sovereign wealth fund, is seeking greater resilience in the market by rebalancing its investment portfolio to withstand market volatility. The Kuala Lumpur-based fund invests more than half of its portfolio in public markets, but its net asset value declined 5% to 81 billion ringgit ($17.4 billion) due to global market downtrends, as reported in March. The managing director, Amirul Feisal Wan Zahir, stated that the company's focus is on making the portfolio more resilient in the market, and they are in the process of rebalancing the portfolio due to the volatility in the market.  

Khazanah National's Financial Performance

Khazanah National reported a 1.6 billion ringgit ($343 million) net profit in 2022, which doubled its profit from the previous year. Additionally, it has achieved a fourth-straight annual net profit after an unprecedented plunge in 2018. In contrast, the MSCI World index saw a more than 18% slump in 2022, and the MSCI Emerging Markets index dived 20% in the same period. At the end of 2022, Khazanah National's portfolio was 55.9% invested in public markets in Malaysia, with 13.4% invested in public markets overseas and nearly a quarter of the portfolio invested in private markets.

Khazanah National's Investment Opportunities

Wan Zahir sees a lot of potential in deploying assets during the volatile market environment, especially in private equity spaces such as business services. He pointed out that industrial consolidation and rising rate environments can squeeze highly leveraged companies, leading them to reduce their costs and explore investment opportunities. Inflation rates have been persistently high globally, despite multiple interest rate hikes to rein in years of super-easy monetary policy following the 2008-2009 financial crisis. As a result, CEOs and corporates are looking for ways to reduce costs.

Khazanah National's Asset Deployment

Khazanah National is currently looking for ways to be more resilient in the market by rebalancing its investment portfolio. Its managing director believes that deploying assets during this volatile market environment presents a lot of investment opportunities, particularly in private equity spaces such as business services. By investing in such areas, highly-leveraged companies can reduce their costs while also exploring potential investment opportunities.
In conclusion, Khazanah National's approach to rebalancing its investment portfolio indicates that there is a need for resilience in the market. This approach towards investing to withstand market volatility will likely have an impact on new businesses. Given the financial performance of Khazanah National, it is evident that investing in the right markets can yield significant profits even in times of economic downturn. By exploring private equity spaces and investing in business services, highly-leveraged companies can preserve their assets, reduce costs, and explore investment opportunities. The current volatile market environment presents multiple investment opportunities, and new businesses should be open to exploring these opportunities or partnering with a company like Khazanah National to benefit from their investment strategies. Inflation rates are persistently high, and corporations are looking for ways to reduce costs, creating avenues for smart investments and expansive growth. Overall, new businesses can learn from Khazanah National's investment strategies to build more resilient portfolios that withstand market volatility and achieve significant success.