Malaysia's largest fund manager, Permodalan Nasional Bhd (PNB) will continue diversifying its asset portfolio in the overseas market, viewing the tough financial market downturn caused by the COVID-19 pandemic as a good opportunity to accumulate good quality stocks.

Group chairman Tan Sri Dr Zeti Akhtar Aziz said as a long-term investor, PNB focuses on the fundamentals; avoiding market congestion while identifying mega shifts in the financial market.

“Market weakness is in fact an opportunity for us to accumulate good quality stocks at lower valuations, and our current cash pile -- about 13.4 per cent of our total asset -- puts us in a good position to take advantage of this prevailing market mispricing,” she said.

Speaking at the virtual media briefing on PNB’s 2019 Annual Report and Strategic Plan for 2020-2022 here today, Zeti said that PNB has outlined its way forward in Focus 4 -- a strategic plan which aims to ensure that the company is well-positioned to navigate through these tough times.

More importantly, Focus 4 aims to ensure that PNB will be in a state of readiness, with expanded capabilities to ride on the recovery when it occurs, she said.

President/ chief executive officer Jalil Rasheed said the three-year approach would provide PNB with the flexibility to be more responsive and agile to harness opportunities against the current fast-paced backdrop.

He said with Focus 4, PNB would continue to accelerate its portfolio diversification via investments into new asset classes and geographies, including global real estate opportunities with attractive yields.

PNB also plans to increase its global exposure to 30 per cent by 2022 from 8.5 per cent as of end-2019, he said, adding that PNB would strategically diversify its investments over a spectrum of global assets, while increasing capital efficiency and crystallising a more vibrant investment process.

“We have made significant progress in diversifying our portfolio last year and we will continue to build on this momentum. The goal is to optimise overall risk-adjusted returns in a persistently low-yielding environment.

“Not only will we be diversifying asset classes, but also sub-classes underneath to capture specific sectors and geographies,” he said.

Jalil added that PNB is looking at online shopping private equities -- especially the ones in Asia -- as a potential investment, as the fund manager aims to diversify its assets away from developed market.

Meanwhile, commenting on the 2019 performance, Zeti said despite the volatile and challenging global economics, PNB recorded a resilient financial performance, making good progress in its portfolio diversification efforts as well as liquidity management, while enhancing unit holders’ experience./

She said PNB was able to sustain the growth of its Assets Under Management, which surpassed the RM300 billion mark to reach RM312.0 billion, with units in circulation increasing by 7.3 per cent to reach almost 254 billion in 2019.

PNB has also disbursed a total of RM13.2 billion in income distributions and bonuses to its unit holders in 2019, bringing its total cumulative income distribution to RM200 billion for all of its 14 funds since its inception.

“This was very much driven by PNB’s prudent investment approach, in tandem with its recent diversification into new asset classes and global financial markets,” she said.

Going forward, Zeti said 2020 would indeed be a very challenging year for companies worldwide, including PNB, as most countries are not immune to the economic impact of the unprecedented COVID-19 pandemic.

She said volatility in the financial market would likely continue, with businesses being heavily disrupted, earnings adversely affected, and unemployment expected to increase.

However, there is some room for optimism amidst the bleak financial and economic conditions, she opined.

“While the necessary economic pain to contain the spread of the pandemic may be intense and immense, it will, however, be temporary.

“Once the economic shutdown is lifted, economic activities can be reignited. In the immediate time frame, a recession may be felt before the recovery occurs. We therefore need to look beyond the immediate term,” she added.

Asked on whether PNB could perform better this year than last year, Zeti said several factors would determine the company’s performance; namely, that the world would not experience a second wave of COVID-19 and the resumption of consumer spending.

She also said that the effectiveness in the implementation of policies by countries, especially those related to small and medium-sized enterprises, as well as the rising unemployment rate were also factors that would affect its outlook.

Zeti added that PNB’s performance would also depend on the diversification of its portfolio and managing the risks so that it would be mindful of the developments that it would encounter, as well as the performance of the companies that it had invested in.