PNB Declared Lowest Dividend

This week - Permodalan Nasional Bhd (PNB) declared its lowest ever return - a dividend of 5.5% including bonus. . PNB is the largest fund management house in the country and there are more than 14 million Malaysians who own Amanah Saham units. Its flagship fund, Amanah Saham Bumiputera (ASB) unitholders have been enjoying returns of 7% to 8% over the past 29 years.

PNB attributed the weak performance on the local stock market, which is down more than 7% this year and currently trading at its lowest in three years. It is not only PNB which is suffering. The country’s largest fund, the Employees Provident Fund (EPF), just last week warned that 2019 has been a difficult year for the fund and the uncertainty in the market would affect the performance of the fund.

The EPF is expected to declare its annual dividend early next year when it announces its full-year results. For its third quarter of 2019, EPF saw a 7.6% drop in total investment income compared to a year earlier. It said this was due to the uncertain and volatile capital market that has worsened since 2018.

What is also clear is that the entire privately run unit trust industry is also in the doldrums, returns-wise. Funds focused on buying Malaysian stocks made an average return of about 2.24% over the last 12 months. The performance of all these funds, which have exposure to the local stock market, is only to be expected.

The FBM KLCI, which gauges the performance of the top 30 companies on Bursa Malaysia based on market capitalisation, has been the worst-performing index in the region. The index has declined by more than 7% this year after it fell almost 8% a year earlier. While the US-China trade war is one of the main reasons often cited for the weak market, it is worth noting that Malaysian corporate results have also suffered.

Many equity analysts covering the Malaysian market have been continuously lowering their corporate earnings growth forecasts since the beginning of the year. For example, MIDF Research is targeting a mere 1% growth in corporate earnings for 2019.

Meanwhile, the MSCI Emerging Markets index, which tracks big stocks in markets like China, Taiwan, Indonesia and India, rose by 8.5% over the first 11 months of 2019. Also, major equity indices in the United States, United Kingdom, Europe, Japan and Asia made returns of between 9% and 23.4% over the same period. This has led to the few local funds that invested in overseas equities to perform better.

The Lipper Fund tables showed that on average, funds focused on Asia-Pacific equities made 8.23% return for the last 12 months. Meanwhile, funds that invested in global stocks made an average return of between 10% and 11.7%.