Malaysia's sovereign fund Khazanah records losses in 2018

KUALA LUMPUR, March 5 (Xinhua) -- Malaysia's sovereign wealth fund Khazanah Nasional Berhad said Tuesday it recorded a pre-tax loss of 6.27 billion ringgit (1.54 billion U.S. dollars) in 2018 due to fewer divestments, reduced dividend income and higher impairments.

The government investment fund said in a statement that the losses were recorded during a period of transition for the group in an unfavorable market. The fund also declared a dividend of 1.5 billion ringgit (368 million U.S. dollars) for 2018.

For comparison, the group posted pre-tax profit of 2.9 billion ringgit (711.3 million U.S. dollars) in 2017.

Last year, the Malaysian government initiated a restructuring and reorganization of the fund involving leadership changes in the board of directors and management, as well as a refreshed mandate and objectives. As part of this, Khazanah undertook a review and revaluation of its investments, which is reflected in its 2018 results.

Meanwhile, Khazanah's portfolio value, measured by its net worth adjusted (NWA), declined 21.6 percent year-on-year to 91 billion ringgit (22.32 billion U.S. dollars) last year.

The fund's realizable asset value also declined to 136 billion ringgit (33 billion U.S. dollars) from 157 billion ringgit (38 billion U.S. dollars) during the same period.

The performance was affected by global economic uncertainty in 2018, which saw markets underperform due to geopolitical tensions and a pessimistic growth outlook for emerging markets, said Khazanah.

The portfolio was further impacted by domestic developments, including a subdued earnings outlook, market volatility, and regulatory changes during the period under review, it added.

The long-term portfolio performance, however, remained on an upward trajectory, with NWA achieving an 11 percent return per annum over the last 10 years.

Going forward, Khazanah will focus on executing its portfolio rebalancing strategy and strengthening its financial position.

It will also be developing policies, guidelines and processes for the dual-fund structure, as well as restructuring and enhancing internal capabilities to deliver on its refreshed mandate.