'EPF, KWAP lost RM75mil on Felda Global shares'

Two pension funds, the Employee's Provident Fund (EPF) and Retirement Fund Incorporated (KWAP), have collectively suffered an estimated paper loss of RM75 million as a result of buying Felda Global Ventures Holdings (FGV) shares, claims PKR.

The party’s trade and investment bureau chairperson Wong Chen (right) said this is because the pension funds had bought the shares despite market analysts generally recommending against the stock since Aug 9 last year.

Despite that, Wong said the EPF had since bought 46 million shares while KWAP bought 10 million, bringing the total shares to 275 million and 253 million respectively.
 
"The buying behaviour of EPF and KWAP are extremely contrarian. This seems unbecoming of a pension fund," he told a press conference today.

If the analysts’ predictions are correct, Wong warned that EPF’s losses could worsen from RM40 million to RM146 million in 12 months, while KWAP’s would worsen from RM35 million to RM129 million over the same period.

This is based on data compiled by finance data provider, Bloomberg, he said, which found that 21 analysts believe that on average, FGV stock prices would drop from RM4.60 to RM4.19 over the next 12 months. 

He also singled out one analyst, Alliance Research Sdn Bhd for having one of the worst 12-month target price at RM3.53 per share. This would mean a paper loss of about RM327 million for EPF and RM295 for KWAP.

In a screenshot from a Bloomberg terminal shown to the press, the 21 analysts appeared to be split between whether to sell the stock or hold it. Only two recommended that it should be purchased. 

“So who are these fund managers that EPF and KWAP listening to? If they are listening to market analysts who are trained to do this kind of research, surely they won’t buy, but they have bought instead! Why?

“It does not make economic sense. Long-term strategy, if you asked me, I would wait until the price falls to RM4, then I’d buy. You don’t buy as it is going down,” said Wong. 

He demanded EPF and KWAP to answer whether it had received any instruction from politicians to prop up FGV share prices.

During its IPO in June last year, EPF was allotted 185 million FGV shares while KWAP was allotted 194 million.

EPF has since bought another 90 million shares in total for RM455 million, while KWAP bought 59 million shares for RM305 million, according to Wong.