PUTRAJAYA (Sept 29): Permodalan Nasional Bhd (PNB), the country's biggest fund management company, has revised up its forecast for Malaysia’s economic growth this year to 5.3% from an earlier estimate of 4.3%. This follows the strong second-quarter performance and the continued growth in the construction and the electrical and electronic (E&E) sectors.

“Last year when we calculated the gross domestic product (GDP), we were very conservative because we were not sure about the regional geopolitical issues. But I must say things are better than expected, thus the revised forecast (for 2017 GDP growth)," PNB chairman Tan Sri Abdul Wahid Omar told a media briefing to give an update on its third-quarter 2017 outlook and announce the Amanah Saham 1 Malaysia (AS 1Malaysia) income distribution today.

“This (revision) is on the back of a strong second-quarter, and construction to continue being significant given the number of infrastructure projects currently. There is also momentum in agriculture (crude palm oil) and E&E,” he said.
 
Abdul Wahid also noted that the ringgit is still relatively weak based on economic fundamentals.

He believes the local currency will continue to strengthen over the long term, although it would still be subject to fluctuations depending on trade and investments.

Asked if that hinders overseas investments, Abdul Wahid said it would depend on which currency one is looking at.

“We also look at the specific investment opportunity, For instance, if the debt investment (denominated) in US dollars is generating a 10% return and we expect the ringgit to weaken by 3%, the net return would be about 7%, which is decent.

“But we are always cautious. When we make investments abroad, it must be at the right opportunity and time and whether the investment is in sterling pounds or US dollars,” he said.

PNB president and chief executive officer Datuk Abdul Rahman Ahmad said the company’s concern on such investments for now stems from the US market that is hitting record-level highs.

“Our investment team feel it is at a very elevated level (now), so we are very cautious. Hence, our step into global asset investment would be in a prudent manner in order to generate necessary returns,” he said.

Abdul Rahman said PNB would like to increase its overseas equity investment portion from the current 39% relative to its property investment — which is at 50% now — but believes that now is still not a good time to invest. PNB currently invests in the European and Chinese markets.

On whether the FBM KLCI could break the 1,800 level in the fourth quarter of 2017, Abdul Wahid said it will depend on what happens in the coming months, with high anticipation of a good Budget 2018 and it would set the right sentiment of going to the election.

“(However,) our in-house analysts’ view offers a range of 1,700 to 1,800. I think it (breaking the 1,800-point level) depends on geopolitical aspects but if we focus on fundamentals where core earnings are better, there is the general belief that it will move up above 1,800,” he said.

The benchmark KLCI closed down 2.48 points or 0.14% at 1,755.58 today.