12 Jan - 3 min read
More economists have stepped forth to declare their optimism in the Employees Provident Fund’s (EPF) capability to deliver good dividends for 2021. This came following the provident fund’s announcement yesterday, which indicated that it accrued a nine-month profit of RM48.02 billion despite challenges such as massive Covid-19 withdrawals, low fixed-income returns, and weak domestic stock market.
Economist Dr Geoffrey Williams said that the EPF’s health is considerably intact despite contributors having withdrawn a whopping RM101 billion via i-Lestari, i-Sinar, and i-Citra. However, it does have a slight risk that the total assets may hover below the RM1 trillion mark for 2021, he said.
“Total EPF investment assets were RM988.55 billion compared to RM941.77 billion last year. So, assets have increased by just under 5% in the period, even in the face of significant withdrawals. But good investment management have proven EPF to be robust to the Covid-19 pandemic and the withdrawals policy,” Dr Geoffrey further said.
Dr Geoffrey also explained that the growth in assets can be attributed to the increase in overseas investments, which amounted to 36% in 2021 as compared to 32% in 2020. “This makes sense given that international equity markets have performed much better than Bursa Malaysia during 2021,” he said.
Similarly, Dr Yeah Kim Leng also believes that the dividend payout for 2021 will be favourable, given the better performance of the economy in the fourth quarter. “While there is nearly a 20% drop in gross investment income in the third quarter of 2021 (3Q21) compared to 3Q20, which is worse than expected, the 7.7% year-on-year rise for the first nine months of 2021 is commendable,” he commented.
For context, EPF’s report yesterday indicated that the gross investment income in 3Q21 amounted to RM13.97 billion, which is lower than the RM17.33 recorded in 3Q20. This is attributed to the volatility in both the domestic and emerging markets, largely caused by concerns of rising inflation and interest rates.
Aside from that, EPF also highlighted and broke down various other figures in its announcement yesterday. Among some key data shared included the fact that equities continued to be it main income contributor, accounting for 54% of the gross investment income at RM7.5 billion. Meanwhile, investments in fixed income instruments, real estate and infrastructure, as well as money market instruments contributed 36% (RM5 billion), 8% (RM1.18 billion), and 2% (RM0.29 billion) of the gross investment income, respectively.
Prior to this, several other economists, too, have expressed their confidence in EPF’s ability to post a respectable dividend for 2021. They also predicted that EPF’s dividend will be marginally higher than that posted by Permodalan Nasional Bhd’s (PBN) Amanah Saham Bumiputera (ASB) for 2021.
(Source: The Malaysian Reserve)
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world