BlackRock has been in Malaysia for a long time, the investment value is now more than RM32 billion
24/06/2024 10:20 MYTH
This US-based firm is actively investing in Malaysia with a total market value of US$4.3 billion or about RM24.7 billion. - DagangNews photo
KUALA LUMPUR: Following Prime Minister Datuk Seri Anwar Ibrahim's statement on June 21, that "BlackRock has an operation or even a company in which BlackRock has an interest, which operates throughout the country and in the stock market", data shows that BlackRock has an interest in Bursa Malaysia shares worth RM24 .7 billion and RM7.9 billion in Malaysian government and corporate bonds.
The Prime Minister's statement was a reaction to those who called for Blackrock's investment in Malaysia to be stopped.
According to publicly available data, global investment firm, BlackRock already has equity investments in 100 listed companies in Malaysia covering the entire industry sector, with the three largest entities being banking institutions in the country, based on Bloomberg data as of May 2024.
The US-based firm has been actively investing in Malaysia with the latest total market value (MV) of US$4.3 billion or about RM24.7 billion, which is listed company equity investment of RM18.7 billion and bonds of RM7.9 billion.
Based on BlackRock's list of investments in Malaysia, the banking sector is the top three entities it invests in, namely Public Bank with RM2.34 billion (2.75%), followed by Maybank with RM2.16 billion (1.88%) and CIMB with RM1.42 billion (2.07%).
Tenaga Nasional ranked fourth with an investment of RM860 million (1.32%); followed by Metal Aluminum RM625 million (1.62%); CelcomDigi RM526 million (1.03%).
Here is the full list of 30 companies that have BlackRock investments, based on Bloomberg data as of May 2024:
In terms of bonds, BlackRock has the highest investment in Malaysian Government Bonds of RM2.53 billion; Petronas Capital (RM2.52 billion); Bond issues of RM1.57 billion).
Here is the full list according to Bloomberg data as of May 2024:
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Based on the Bloomberg data above, it is clear that BlackRock is not a new investor but is indeed already active, and even has its operating office in Malaysia.
BlackRock is the world's largest international investment company and manages global assets worth approximately US$10 trillion. Founded in 1988, BlackRock has achieved dramatic success to the top of the investment world, playing a major investment role in most national economies, including Malaysia.
BlackRock and two other similar investment firms Vanguard and State Street are widely regarded as 'The Big Three' Asset Managers worldwide. These asset managers are among the largest owners of publicly traded companies.
These ``Big Three'' have Assets Under Management (AUM) equivalent to more than 75% of the GDP of the United States in 2023 or about 55 times the GDP of Malaysia in 2023!
The firm also actively invests in other Islamic countries such as Saudi Arabia with a fund value of US$24 billion, United Arab Emirates US$8.6 billion and Indonesia US$11 billion.
In addition, BlackRock is active in China with investments worth US$199 billion and India US$148 billion.
BlackRock primarily invests funds for clients through many companies and funds. BlackRock also advises governments and has close ties to the White House and the US Federal Reserve.
BlackRock plays a leading role in promoting corporate compliance with environmental, social and corporate governance (ESG) investment charters, and has become very active in the renewable energy and environmentally sustainable sectors.
The next question is based on the above data as well, why is the participation of BlackRock's associate company, GIP in the proposed privatization of Malaysia Airports Holdings Berhad (MAHB) different from the existing investments of this firm in Malaysia?
Based on MAHB's shareholder data, BlackRock already owns 2.02% equity worth RM286 million in the airport operator.
Some want the GIP transaction in MAHB to be cancelled, should the call be renewed to cover the entire BlackRock investment? READ: BlackRock is not involved in the privatization of Malaysia Airports, says GIP
In fact, BlackRock invests in almost 100 Malaysian companies – that's why it functions as an investment firm. And its presence as a global investor, helps fuel the interest of general investors in Bursa Malaysia.
Pull out all the BlackRock funds, you can imagine what kind of chaos will happen to the Malaysian financial system.
Economic analyst, Wan Mohd Farid Wan Zakaria said, "it is important to note that BlackRock is only one of the many institutional investors operating in the Malaysian economy".
"His influence is part of a wider landscape of domestic and international investors, financial institutions, and government actors that shape Malaysia's economic trajectory," he said.
In the scenario of a global investment firm withdrawing funds from a country, he said, it could trigger volatility in the country's financial market, leading to a sharp drop in stock prices, bond values and currency exchange rates. This volatility can disrupt investor confidence and exacerbate economic instability.
"The outflow of funds can also put pressure on the country's currency reserves, leading to currency depreciation and potential balance of payments challenges.
"It can also result in a downgrade of credit ratings because the withdrawal of global funds can signal to credit rating agencies and investors that the economic prospects of the affected countries have deteriorated.
"This perception can cause a credit rating downgrade, making it more expensive for the country to borrow in the international market and potentially restricting access to capital," he said, who is a Senior Lecturer at UiTM's Faculty of Management and Business.
A corollary of this is an economic contraction where the withdrawal of global funds can reduce liquidity in a country's financial markets, making it more difficult for businesses to obtain capital for investment and expansion.
These investment constraints can lead to slower economic growth or even recession, as businesses cut back on spending and hiring.
Overall, he said, the withdrawal of global fund investment from individual countries could have far-reaching implications for the economy, financial markets and broader macroeconomic stability.
"Therefore, this MAHB issue needs to be thought about in depth by all parties and not from just one angle, because the implications for the Malaysian economy will be bad. Is the Malaysian economy able to survive if this happens? " he asked.
