KUALA LUMPUR: Malaysia’s pension fund managers are not putting money into bitcoin, despite the digital currency’s recent stratospheric rise.
Armed Forces Fund Board or Lembaga Tabung Angkatan Tentera (LTAT) chief executive officer Tan Sri Lodin Wok Kamaruddin told NST Business that bitcoin is a highly speculative investment, where the value does not necessary reflect its fundamentals.
“We don’t have any intention to invest in bitcoin at all. We would prefer to confine our investment within the country where we can, to some extent, control the risk and investment better,” he said in a telephone interview.
He said the government statutory body would not take the risk in such kind of investment it has at its disposal.
“Since Bank Negara Malaysia (BNM) deems it as illegal, we certainly would not want to have anything to do with it. I think it is something that the public should refrain from getting involved with their hard-earned money,” he added.
Lodin said LTAT is currently managing about RM9 billion worth of armed forces retirement money.
“We have got quite a fair distribution of our assets in different sectors, especially those which are in line with the government’s economic development programme such as infrastructure, property development, plantation and ship-building as well as retail operations like BH Petrol,” he said.
Lodin said presently LTAT does not plan to invest abroad.
“No doubt in some cases, investing abroad may be more attractive but at the same time the risk is higher such as currency and politics. At least, if it is within the country, we could mitigate these risks,” he said, adding that LTAT able to pay on the average of 11 per cent dividend annually to contributors.
In a separate meeting with the Employees Provident Fund (EPF), its chief executive officer Datuk Shahril Ridza Ridzuan said cryptocurrencies such as bitcoin have no intrinsic value and donot provide any kind of actual asset yield. Therefore, it is very hard to invest in it.
“Cryptocurrency is effectively buying something with the hope of selling it to someone else for a higher price,” he said.
Shahril Ridza said the speculative element in the returns profile is too great for a fund like EPF, where it focuses on generating actual returns on assets.
IQI Global chief economist Shan Saeed concurred, saying bitcoin has no sustainable value and none of the global central banks approved it.
“Nobody has approved bitcoin as a mode of (payment) instrument. Although people are buying, the price is likely to crash. It is a fancy item with no fundamentals,” he said.
Shan advised investors in Malaysia to stay away from Bitcoin, saying that the chances of losing money are fairly high.
“Recently the United Kingdom regulators have warned investors to stay away from bitcoin. I’m not in favour of bitcoin because it is a virtual currency. It’s not even worth looking at,” he said.
Shan said bitcoin is not secured without regulators’ approval, and it is a perfect example how the bubble could burst.
“The incredible rise of bitcoin over the last few weeks has all the hallmarks of a major topping action when a speculative asset in the final euphoric stages of a big bubble formation makes some unsustainable huge price jumps,” he said.
He said bitcoin should soon witness a final blow off with one last giant spike higher on huge volume followed by a major price reversal on the same day.
The Retirement Fund Inc (KWAP) chief executive officer Datuk Wan Kamaruzaman Wan Ahmad recently said cryptocurrency is not the type of risk it can take.
“We are not invested in cryptocurrency because we prefer to only take moderate risks. However, we do personally monitor the movement of the Bitcoin’s trends,” he said in a recent interview with BFM.
He added that KWAP has always aimed for more stable investment, with slightly above a double-digit return to its shareholders.
Last week, Bank Negara announced that Malaysia had recorded RM75 million transactions monthly from four digital currency exchanges in the country.
Its deputy governor Abdul Rasheed Ghaffour said digital currency exchanges here providing the services were Luno, CoinHako, XBit Asia and PinkExchange.
He said Bank Negara would meet cryptocurrency exchanges this week, noting that the global market capitalisation of digital currency stood at US$420 billion.
He said while digital currencies were not legal tender in Malaysia, the central bank was not stopping their trading because “a ban would curb innovation and creativity.”
In an AFP report quoting investment firm deVere Group chief executive officer Nigel Green, bitcoin started the year at US$1,000 per unit in January. By mid-December, it had shot to within striking distance of US$20,000, a dizzying climb that stoked fears of a bubble even in financial circles used to speculation and volatility.
Bitcoin was created in 2009, since then, it has become the world’s decentralised cryptocurrency.