EPF posts RM38.92b investment income in first half of 2025, up 3pc
The total investment income included a RM0.44 billion mark-to-market gain on securities that have not been realised, mainly due to foreign exchange rate fluctuations.
In line with the EPF's policy, this gain will not be distributable as dividends, the fund said in a statement today. — Bernama
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The Star
2 hours ago
- The Star
Upside to EPF's investment returns
PETALING JAYA: Ongoing uncertainties over the US tariffs and their impact are expected to cloud the Employees Provident Fund's (EPF) investment income performance in the second half of the year (2H25), says Sunway University economics professor Dr Yeah Kim Leng. Nonetheless, Yeah opined that global financial markets could be buoyed by likely interest rate cuts from the Federal Reserve (Fed) and further dollar weakening, thus providing upside to EPF's investment returns. 'International investments contributed 63% of EPF's investment income in the second quarter of 2025 (2Q25), indicating the dominant contribution of improved performance of global financial markets. 'The balance of risks to EPF's investment income is tilted to the downside although lower-than-expected interest rates could boost returns from its fixed income portfolio,' he told StarBiz. The provident fund announced yesterday that it posted a 3% year-on-year (y-o-y) gain in its total investment income for 1H25 to RM38.92bil, from RM37.9bil previously. The total investment income includes RM0.44bil mark-to-market gains on securities that have not been realised, mainly due to foreign exchange rate fluctuations. These gains, in line with EPF's policy, will not be distributable as dividends. For 2Q25, EPF's total investment income rose by 22% y-o-y to RM20.61bil from RM16.91bil in 2Q24. This was also an improvement from 1Q25, in which EPF saw a 13% y-o-y drop in its investment income to RM18.31bil. Volatility in global markets on renewed trade frictions and policy uncertainty were cited as reasons for the decline then. EPF chief executive officer Ahmad Zulqarnain Onn attributed the stronger 1H25 performance to 'steady market recovery, strong domestic contributions, and a disciplined portfolio management approach'. Nevertheless, Ahmad Zulqarnain said the EPF remains 'vigilant of downside risks, including softening global trade, unpredictable trade policies, renewed inflationary pressures and shifting geopolitics', notwithstanding a better 2Q25. Tradeview Capital chief executive officer Ng Zhu Hann said the possibility of a rate cut in September by the Fed is a key macroeconomic factor to watch for, as to whether EPF can maintain its 2Q25 investment income momentum. 'Domestically, corporate Malaysia's 3Q earnings will be a key indicator for EPF's investment income prospects. 'We need to see if corporates' earnings can sustain dividend payouts, as EPF holds stakes in many large locally-listed firms. 'However, factors such as the sales and service tax expansion and weaker consumer and investment confidence may weigh on results,' he said. US inflation figures in July accelerated slightly less than expected and this supercharged expectations of a September rate cut by the Fed. CME Group's FedWatch tool put the odds of a quarter-point cut at the Sept 16 to 17 Federal Open Market Committee meeting at 99.9%. The US consumer price index rose 0.2% last month, in line with expectations, and rose 2.7% year on year, below consensus forecasts of 2.8%. Ng said the improvement in EPF's investment income for 2Q25 was mainly due to the resolution of tariff policies by the Trump administration. 'Given that 67% of EPF's investment portfolio is in equities, its performance is closely tied to equity market volatility,' he said, adding that the retirement fund's investment income is 'recovering' and that EPF needs to play catch up for the remaining five months of the year. Meanwhile, Bank Muamalat Malaysia Bhd head of economics, market analysis and social finance Dr Mohd Afzanizam Abdul Rashid is cautiously optimistic on EPF's investment income prospects looking ahead. 'Thus far, the gross investment has increased by 3% y-o-y in 1H25 and looking at the global equities market, it appears that 3Q25 is expected to record a respectable performance,' he said. Afzanizam is of the view that the better performance recorded by EPF in 2Q25 just goes to show that global market sentiments are systemic and it is affecting the institutional investors globally including EPF. 'Hence, strict adherence to their strategic asset allocation and at the same time remaining nimble in their investment strategy would allow them to succeed in such a volatile market,' he said. Further, Universiti Tunku Abdul Rahman economics professor Wong Chin Yoong said EPF's investment income performance is 'very likely to look good in the coming quarters'. This, he added, is underpinned by the performance seen in major indices like Nasdaq and S&P 500, which have hit new record highs entering into 3Q – mainly led by the artificial intelligence bonanza and the expectations of a September rate cut by the Fed. In 2Q25, equities remained the largest contributor to investment income, generating RM13.77bil, a 35% y–o-y increase, compared to RM10.23bil in 2Q24. 'The strong recovery in the global equity markets during the quarter provided opportunities for EPF fund managers to capitalise on the gains and contributed to the income growth. 'Equities accounted for 67% of the total investment income for the quarter,' EPF said in a statement. On the other hand, fixed income continued its role in capital preservation, generating RM6.73bil or 33% of the total investment income for the quarter. This asset class, which comprises Malaysian Government Securities and equivalents, as well as loans and bonds, continued to provide stable returns and helped cushion the impact of volatility in the equity markets, EPF noted. Further, real estate and infrastructure recorded an income of RM0.29bil in 2Q25. Given the EPF's long-term investment horizon in this asset class, currency movements have minimal impact on actual returns over time. Similarly, money market instruments, which are also largely denominated in non-ringgit currencies, were affected by the ringgit's appreciation against the US dollar in 2Q25, resulting in a RM0.18bil loss after foreign exchange translation. As of June 30, 2025, total investment assets stood at RM1.31 trillion, representing an 8% y-o-y growth. International investments accounted for 39%, with the increase partly reflecting improved valuations in global equity markets. During 2Q25, international investments generated RM12.92bil or 63% of the total investment income. EPF registered 286,194 new members in 1H25, raising total membership to 16.4 million. Of these, 8.98 million are active members, representing 51.5% of the 17.43 million labour force as of June 2025. The EPF's active-to-inactive member ratio remained stable at 55:45 in 1H25. New employer registrations reached 37,402, increasing total active employers registered with the EPF to 619,662 as at June 2025. On a quarterly basis, total contributions increased by 13.8% to RM31.21bil, from RM27.42bil in 2Q24. Voluntary contributions increased by 55% to RM11.68bil in 1H25, from RM7.55bil a year earlier. For the first six months, the number of formal sector members contributing above the statutory rate was 34,442, compared to 19,591 in the same period last year. 'In the months ahead, the EPF will step up engagement with employers and key stakeholders to ensure smooth implementation of mandatory contributions for non-Malaysian citizen employees. 'This policy represents a significant move towards strengthening social protection and promoting greater equity in the labour market,' it said. The EPF also reaffirms that the proposed retirement savings account restructuring, as announced under the 13th Malaysia Plan, is intended to help members' savings last longer in retirement through a steady income stream, with no change to existing withdrawal rights and a voluntary opt-in for current members.
New Straits Times
5 hours ago
- New Straits Times
2026 Budget: East-West Highway upgrades a priority for Works Ministry
KUALA KANGSAR: The East-West Highway (JRTB), particularly the Gerik-Jeli stretch, is among the key priorities for the Works Ministry under the upcoming 2026 Budget, said Minister Datuk Seri Alexander Nanta Linggi. He said the ministry has submitted a request for funding to upgrade several sections of the route, citing urgent safety needs. However, the exact allocation will depend on the government's final decision. "It's not a special allocation, we've included it under regular funding requests for the JRTB," he told reporters after the official opening of the Sultan Muzzaffar Shah Bridge at Dataran Manong today. Earlier, the Sultan of Perak Sultan Nazrin Shah officially inaugurated the bridge. Also present were Raja Permaisuri of Perak Tuanku Zara Salim, Perak Menteri Besar Datuk Seri Saarani Mohamad, his wife Datin Seri Aezer Zubin, as well as Public Works director-general Datuk Roslan Ismail. As part of ongoing safety measures along the JRTB, Nanta said 385 solar-powered streetlights have been installed in high-risk areas and dangerous bends, commonly known as 'black spots'. "These are not for the entire highway, only for critical sections identified through our assessments," he said, adding that damaged guardrails, signboards and road markings are also being repaired or replaced. Nanta also announced the launch of the MYJalan mobile app, which aims to enable the public to report road damage and submit feedback directly to the ministry. "Perak has been chosen as the first state to launch the MYJalan initiative, reflecting our commitment to public feedback and road safety," he said. He said the JRTB's condition had been a concern since the start of his tenure and described the highway as not only a vital interstate link but also a key part of the country's road development history. Data collected via the app, he noted, has already supported federal funding requests, leading to repair and upgrade works along the JRTB and other federal roads in Perak. – Bernama
Barnama
5 hours ago
- Barnama
Petronas Ownership Remains Under Federal Govt, Steps Taken To Enhance Participation Of States -- Azalina
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