Speaking to FMT, Universiti Tun Abdul Razak economist Barjoyai Bardai said it was only a “paper loss”, calculated based on the drop in share prices.
“Unless EPF sells all the shares today, it won’t be a loss yet as the share prices can go up again. So it is only a theoretical loss,” he said.
The Edge reported on Monday that the top 10 worst performing stocks in EPF’s portfolio during the period were Cahya Mata Sarawak Bhd (CMS), Malaysian Resources Corp Bhd (MRCB), IJM Corp Bhd, Gamuda Bhd, Telekom Malaysia Bhd (TM), Axiata Group Bhd, Tenaga Nasional Bhd (TNB), CIMB Group Holdings Bhd, Malayan Banking Bhd (Maybank) and Genting Plantations Bhd.
Barjoyai said stocks were falling throughout the region, not just in Malaysia, though some of the companies in EPF’s investment portfolio were hit extra hard by the new Pakatan Harapan government’s plans to cancel mega projects.
These include the RM55 billion East Coast Rail Line (ECRL), the RM110 billion Kuala Lumpur-Singapore High-Speed Rail (HSR) and the RM45 billion MRT Line 3.
“These companies can perform, but their share prices dropped because their near future prospects were affected as they were set to reap profits from the big ticket projects,” Barjoyai said.
He said there was no need for EPF contributors to worry, as all 10 companies were seasoned and could survive without preferential treatment from the government.
“The government has made it clear that its immediate priority is to reduce the country’s debts, and one way is to cancel mega projects, though this may come at the expense of institutions and companies that would have benefited from these projects.
“So moving forward, these companies have to become leaner because they will need to compete on an open-tender basis,” he said.
He said EPF could recover from the setback by the third quarter of 2018, once foreign investors see a more stable government with better transparency and governance, a possible influx of Japanese investments and the reintroduction of the sales and services tax (SST) to replace the goods and services tax (GST).
Meanwhile, Universiti Malaya’s Terrence Gomez also noted that stock prices were falling across the board and that this would naturally have an impact on the Malaysian stock market.
“We are going through a transition and we never had such a transition before. So there will be some uncertainty in the market as reforms are being implemented,” he said.
He said although Malaysia was fortunate to experience a peaceful post-election transition, it did not mean there would be no problems or that investors would not be jittery.
“This is normal and it will take time to sort out, perhaps longer than the 100 days targeted by the government due to the extent of the mess Barisan Nasional left behind,” he said.
Gomez said “speed bumps” were normal and “part of the journey” which the government and economy would have to endure in undergoing reforms.
What was important, he said, was the set of reforms in government-linked companies and government-linked investment companies.
He said this included replacing political appointees with competent professionals who are given autonomy to do their jobs, but made accountable to oversight bodies like a parliamentary oversight committee.
EPF sees RM6 bil drop in investment value after GE14, says report