KUALA LUMPUR: Current market conditions have opened up buying opportunities for long-term investors, said the Employees Provident Fund (EPF) deputy chief executive officer, investments, Johari Abdul Muid.

He said that a bearish market was a boon to long-term investors like the EPF, as it provided an opportunity to pick up good, valued stocks at reduced prices.

He said that Bursa Malaysia is expected to remain volatile in line with global and regional markets as investors continue to take a cautious stance while monitoring developments in the domestic and global economy as well as the financial system.

He said like every other fund, the EPF was also affected due to the downturn in the stock markets but was on track until Sept 30 to basically meet budget expectations, as it had realised a big portion of the target earlier.

“The global financial crisis has led to stock markets across the globe falling dramatically. Bursa Malaysia has also not been spared,” he told Bernama in a recent interview.

He said that this factor would naturally have an adverse impact on the funds income and it would be difficult for the 2008 dividend to match that of 2007.

“Furthermore, the recent quarterly announcements by listed companies have reported lower profits which usually translates into lower dividend payouts, or not at all. This will further impact the EPF’s investment income for 2008 and 2009,” he added.

Johari said that although the fourth quarter did not look that rosy, as the full impact of the global meltdown would be felt, it was still an opportunity to buy.

He explained that the EPF subscribed to prudent management and investment policies to ensure reasonable and sustainable returns.

“The EPF is first and foremost the custodian of retirement savings of close to 12 million members and will therefore be always guided by prudence when making investment decisions. It is through this investment approach that we can ensure our members are paid reasonable dividends year-on-year, without risking their savings,” he said.

He also said the EPF’s commitment is that, the dividend would not fall below 2.5 per cent.

“Generating more income has to do with the risk that you are willing to take. As a pension fund, we must ensure that the money is safe. We have to be as efficient as possible in every asset class that we invest,” he said.

In terms of asset allocation, he said that 80 per cent was parked in fixed income instruments such as Malaysian Government Securities (MGS), and loans and bonds with only 20 per cent in domestic equity.

The EPF, he highlighted, is allowed to invest up to nine per cent of its total fund size in foreign equity markets which amounts to RM28 billion.

However, it has only invested RM19 billion to date and in the current difficult time, has managed to lock in RM500 million in profits.

“Our risk perspective when investing overseas is not to put all the eggs in one basket,” he said.

He said besides in-house fund managers, EPF has also appointed external fund managers to manage its funds.

— Bernama