Khazanah: Ukraine-Russia Conflict Has Resulted In Soaring Commodity Prices

KUALA LUMPUR, March 2 (Bernama) -- The implications of the Ukraine-Russia conflict would go beyond local incidents as it has resulted in soaring commodity prices amid sanctions imposed on Russia, said Malatysia's sovereign wealth fund, Khazanah Nasional Bhd. Managing director Amirul Feisal Wan Zahir said Khazanah has a small exposure in Europe and did not have direct exposures to Russian bonds or equities. "That is something that we are assessing but it would have more of a general impact as a result of the conflict," he said during his first briefing on Khazanah Annual Review 2022 here today. Amirul Feisal that the conflict, which resulted in sanctions imposed on Russia, had an impact on commodities prices including higher crude oil prices which impact various sectors such as inflation and the economy. "When you see fuel prices going up, governments will look at their own policies namely monetary policy as well as fiscal policy and how that would impact trade. It is very difficult at this moment to really identify what that would mean exactly because it is all developing as we speak. "This is unique for us in Khazanah because we do not have workers' contributions that we need to reserve for such as pensions or unit trust. We can play a long game and it helps us to choose the strategies for investments," he added. The sovereign wealth fund also called for international borders to reopen to revive the tourism sector, which in turn will help to boost Malaysia Airlines operations and leisure activities under its stable of investments. As such, Amirul Feisal emphasised that Khazanah is focusing on improving Malaysia Airlines operations to ensure yields are maintained and that the airline remains profitable. “The amount of support that the airline will have depends on whether it can resume its activities; it can only resume its activities if people are allowed to travel and we are really hoping that international borders would reopen, the sooner, the better," he said. Khazanah's operating profit fell to RM670 million in 2021 from RM2.9 billion in 2020, mainly due to the financial assistance being extended to Khazanah’s airlines and tourism companies still weathering headwinds from the COVID-19 pandemic. Its profit was also impacted by lower fair value gains and lower dividend income from investee companies on the back of subdued 2020 earnings. Amirul Feisal noted that the reopening of state borders helped to mitigate the effect of the prolonged closure of the international borders. “The moment state borders reopened and people could go for holidays, occupancies had shot up. “Since the international borders are closed, a lot of affluent Malaysians who tend to go overseas for their holidays suddenly discovered all these local gems," he said. Amirul Feisal said Khazanah remained open to collaboration on Malaysia Airlines but the focus remained on its turnaround plan and operations. On the possibility of the disposal of its stakes in Malaysia Airlines, he said Khazanah would need to scrutinise the proposals for the exercise. “It is about what value will anybody bring to the table. That is the main question," he said. -- BERNAMA