Malaysian pension fund to sell London asset and repatriate funds

Malaysia’s second-largest pension fund will respond to a government call to repatriate some of its assets by selling an office building in the City of London.

Kumpulan Wang Persaraan (KWAP), which has approximately 120bn ringgit (£18.92bn) of assets, will sell a building located on 88 Wood Street to an as yet unnamed buyer, chief Wan Kamaruzaman Wan Ahmad told Bloomberg last week.

The fund expected to receive £270m for the property, on top of currency gains, as a result of the strength in sterling, after having purchased it for £215m back in 2013.

Besides the above repatriation, KWAP was set to contribute to a 20bn ringitt capital injection for ValueCap Sdn., the fund manager set up in 2002, which would be used to invest in and stabilise local stock markets.

Moves by Malaysia’s government to prop up local stocks followed two consecutive years of losses – of 4.3% in 2015 and 5.7% in 2014 – for the benchmark FTSE Bursa Malaysia index.

Those falls came alongside a 19% drop year-to-date in the value of the ringitt – making it the worst performing Asian currency versus the US dollar in 2015 - as investors pulled out of many emerging economies.

Last week, Deutsche Bank forecast the pound would move lower to 1.27 versus the US dollar in 2016 and 1.15 in 2017, should US Federal Reserve opt to raise rates while the Bank of England stayed on hold.