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56 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) FoR BEttER PERFoRMANcE

INVESTMENT REVIEW
ECONOMY, MARKET & STRATEGY

MARKET REVIEW
On the global front, 2022 was a turbulent year for private equity, infrastructure and real estate. These
investors with global equities down by USD14 trillion investments have supported the growth of the Fund, in
impacted by geopolitical tensions and rampant inflation. addition to the contributions received from the Federal
This marked the worst performance in 14 years, since Government and employers.
the global financial crisis wiped 40% off stock value
in 2008. Technology shares and crypto assets were In 2022, KWAP conducted its Strategic Asset Allocation
particularly hit after hitting record highs during the (SAA) review, which was approved by the Investment Panel.
pandemic period. Integral to the approved SAA is the emphasis to increase
the allocation to private markets which also saw the
Despite heightened volatility in the global financial inclusion of private credit into KWAP’s portfolio construction
markets, stronger economic activities, positive investor strategies. This is to ensure that KWAP’s portfolio is both
sentiment and an orderly political transition following the resilient and can generate optimised returns over the
15 general election buffered the local equities market. long term.
th
Meanwhile, the global fixed income market weathered Another important part of KWAP’s portfolio design
one of the most challenging years in 2022 as the surge in is to ensure that it has liquidity that is sufficient to
inflation became the primary driver of the performance of continuously deploy capital as part of its SAA transition
the asset class. to achieve the target by 2025. The transition plan also
takes into account the liquidity profile of each asset class,
On the domestic front, local bond market was no exception as well as the intricacies and the nature of private market
to global headwinds. The 10-year Malaysia government investments, whereby capital drawdowns are expected to
bond, which closed at 3.59% for the year 2021, reached ramp up in the subsequent years.
as high as 4.56% in the year 2022 before closing the year
at 4.04%. The movement tracked the global bond rout as As of end-2022, KWAP’s total investment assets continue
fixed income markets were pricing in higher interest rates to grow despite slower global growth and withdrawal taken
and inflation expectations. from the Fund. KWAP’s domestic investments, which
make up 81% of the total investment assets, saw a better
INVESTMENT STRATEGY return in comparison with global market indices. Another
feature of the asset allocation strategy is the flexibility to
Since KWAP’s incorporation in 2007, the Fund’s assets manoeuvre investment allocation. This is represented
have grown from RM41.94 billion to RM158.10 billion as and expressed through Tactical Asset Allocation (TAA)
at 31 December 2022. Over the years, we have remained decisions, in which public asset classes have the flexibility
committed to growing the Fund by pursuing an asset to capitalise on prevailing market trends through actively
allocation strategy underpinned by diversified investments underweighting or overweighting their allocation and/
in domestic and international equities, fixed income, or opportunistically responding to changes within a
shorter-term horizon.