KUALA LUMPUR (Nov 1): Government-linked investment companies (GLICs) form the bedrock of the Malaysian equity market, as they represent about 25% of the market capitalisation on Bursa Malaysia through their investments. 

The GLICs’ investments support the local equity market, and the returns they make from these investments impact Malaysians in one way or another, from their strategies for the investee companies where they are majority shareholders to the returns on savings and retirement nest eggs. 

So when Permodalan Nasional Bhd’s president and group chief executive Datuk Abdul Rahman Ahmad recently pointed out in a forum that total shareholder returns of the local benchmark index over the last 10 years were “anaemic”, even lower than fixed deposit rates, Malaysians should sit right up and pay attention. 

If that is the case, what then does this mean for GLICs’ total returns from the domestic equity market in which they invest?

Data tabulated by The Edge shows that among the 46 companies in which the GLICs collectively held 30% or more equity interest over the past 10 years — from June 30, 2015 to June 30, 2025 — only seven companies provided total returns above 100%. 

None of them were component index stocks. 

Of these 46 stocks that the GLICs invested in, including several which are now delisted or have undergone demerger exercises from their holding companies, 16 have negative total returns over the 10-year period as share prices underperformed. 

It is also worth highlighting that most of the stocks saw a chunk of their total return derived from the dividends paid out to the shareholders. 

In a side story, The Edge explored how the FBM KLCI component stocks have performed over the past decade. The findings were sobering, with the FBM KLCI returning just 2.2% annually to shareholders — trailing even fixed deposit rates. 

Similarly, dividends accounted for most of the gains, as share prices declined amid political instability, scandals, a weakening ringgit, and sustained foreign capital outflows. 

Compared to global and regional benchmarks, Malaysia’s market fell far behind, with several index constituents posting steep losses, where some were even dropped altogether from the index. 

The arithmetic of loss compounded the problem while the drag from underperformers and the structural challenges have all weighed on long-term returns for investors in Malaysian blue chips since mid-2015.

Read the story in Cover Story 1 in this issue of The Edge.

In Cover Story 2, The Edge speaks to KNM Group Bhd’s (KL:KNM)’s non-independent non-executive chairman Tunku Datuk Yaacob Khyra to find out why the beleaguered oil and gas services provider reversed its decision to appeal to the exchange regulator to remain listed.

Tuesday, Nov 4, is set to be its last day as a publicly traded company, as it is likely to be delisted the following day, a little more than 22 years since its floatation exercise on Aug 11, 2003.

What is raising eyebrows is the manner in which KNM is being taken off Bursa Malaysia, as there appears to be some amount of hostility as Yaacob and the regulator lock horns.

Yaacob’s flagship MAA Group Bhd (KL:MAA), where he is executive chairman, has a 19.37% equity interest or 783.54 million shares in KNM, making the insurer the largest shareholder in the oil and gas engineering company, which has been Practice Note 17 (PN17) categorised, or cash-strapped, since Oct 31, 2022.

Yaacob has 41.81% in MAA.

KNM fell into the PN17 category a little more than a year after Yaacob’s MAA surfaced as a substantial shareholder with a 7.02% equity interest on Sept 2, 2021. Since then, Yaacob and the management have been fighting fire as KNM’s fortunes spiralled.

Its regularisation plan, which involved the sale of KNM’s crown jewel, Berlin-headquartered Borsig GmbH, to Japan’s NGK Insulators Ltd for €270 million (RM1.26 billion), was rejected by the exchange regulator.

However, KNM will now delist to facilitate the sale of Borsig, which it claims is crucial for its turnaround.

Read the interview in The Edge Malaysia weekly’s Nov 3 edition.

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