Malaysia Pension Heeds Govt’s Call to Sell Foreign Assets, Invest Domestically

Malaysia’s second largest pension fund is in the process of selling one of its successful international investments – a downtown London office building – and using the proceeds to help boost Malaysia’s domestic market.

The move is in response to a call from the government in August urging institutional investors to shift some of their foreign investments back home.

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Kumpulan Wang Persaraan (Diperbadankan), which has about 120 billion ringgit ($28 billion) of assets, is finalizing an agreement to sell an office building at 88 Wood Street in the City of London that it bought in 2013 for 215 million pounds, according to the fund’s Chief Executive Officer Wan Kamaruzaman Wan Ahmad. As well as getting a higher sale price, the fund will benefit from the sharp rise in sterling against the ringgit over the past two years.

“We are selling the property because we stand to benefit from real estate and foreign-currency gains,” Wan Kamaruzaman said in an interview in Kuala Lumpur earlier this week. “It’s also in line with the government call to repatriate gains back to invest in the domestic market.”

Malaysia’s stock market and the ringgit have been hurt this year by investor worries about a political furore over Prime Minister Najib Razak’s dealings with the state-owned 1Malaysia Development Bhd, and by concerns about the effect of higher U.S. interest rates on Malaysia and other emerging markets.

KWAP, as the state-owned fund is known, expects to be able to repatriate the funds back to Malaysia by the end of the first quarter to invest in local markets, Wan Kamaruzaman said. He didn’t name the buyer of the London office building.

The London office building nearly doubled in value in three years.

Photo  jjMustang_79 via Flickr CC License