KUALA LUMPUR (Dec 21): Malaysia’s corporate earnings is a concern as it continues to disappoint, said Permodalan Nasional Bhd President and Group Chief Executive Officer Datuk Abdul Rahman Ahmad.
As at Dec 20 this year, the FBM KLCI declined 8.1 per cent year-to-date, making it four out of five years that the index recorded a negative price return.
“In reality basis, this is not too bad given (as) other global markets declined even more.
“But it reflected that the Malaysian corporate earnings continue to disappoint, of which over the five-year period, growth has declined by about 1.5 per cent compared to other developed markets such as the US which grew by nearly 11 per cent and the United Kingdom (which) rose by six per cent, “ he told reporters after the announcement on the Amanah Saham Bumiputera and Amanah Saham Nasional income distribution here today.
Abdul Rahman said after a strong 2017, the Malaysian corporate value was affected by uncertain economic environment and volatile commodity prices.
“Our own strategic company actually declined by nearly 11.8 per cent after 2017, when we grew in terms of market capitalisation by about 25.2 per cent.
“The other big challenge is on the other corporate Malaysia across all sectors, especially within the telecommunications side and construction and utilities, we saw a significant decline in the market capitalisation of some of our strategic companies,” he said.
On the corporate sector outlook, Abdul Rahman said it would depend on the economic and commodity price cycle in 2019.
He said if the prices of crude palm oil and other commodities were to improve and the oil price remained resilient, corporate growth could recover.
“We would also like to see Malaysian companies grow their revenue and optimise their costs to expand. We believe that despite the challenges, there is an opportunity to look at operationally in the areas of technology development or utilisation of technology to become more efficient,” he said.
Meanwhile, Abdul Rahman clarified that all PNB’s divestment decisions were based on its own investment requirements as its assets were owned substantially by the public and did not have any impact on government finances unlike other entities.
He cited strategic government investment fund Khazanah Nasional Bhd whose divestment decision would depend on the government prerogative.
On the same note, PNB Group Chairman Tan Sri Dr Zeti Akhtar Aziz said having PNB as a huge investor in the country’s financial markets and economy, the government-linked investment company would not be allowed to be disruptive.
“Therefore there will be gradualism in any steps to be taken by PNB to diversify our portfolio so that we do not become a disruptive entity to our financial markets and our overall economy,” she added.