GLCs Under Fire? (A Most Important Posting)
Malaysia-Finance Blogspot
Savvy market watchers would have noticed a quite deliberate sell down in GLCs and related counters. Yes, markets are depressed, yes… foreign funds are doing another selling wave. But isn’t it a bit out of the ordinary to see GLCs being sold down persistently?
The ones being hammered: Sime Darby (understandably), but others are getting whacked as well, Petronas Chemical, Axiata, MRCB, UEM Land, CIMB, AirAsia (new link up now can be considered as related GLC counter), … even Kencana, IJM, SP Setia …
Coffee shop talk would have you believe that it could be an aggregation of various factors:
1) Unpalatable corporate governance issues
2) Cashing up owing to upcoming elections
3) Downgrades in property and oil and gas sectors
Foreign funds vote with their shares. Recent corporate governance issues have been very unpalatable. Some even say that certain parties are trying to push through certain deals prior to the elections, at all costs. Besides the Sime Darby-E&O deal, the AirAsia-MAS deal was a sour note … not many mainstream media or analysts dared to mention that CIMB was advising both parties??!! What kind of crap is that? Its like a court case where the prosecutor and defending lawyer are from the same firm. Please show me ONE other case in global corporate M&A transactions whereby one investment bank advises both sides.
You’d think there would be more support from local funds, in fact PNB and EPF have been having to up their stakes in indexed stocks over the last 3 years owing to lessening participation of other investing groups (private and foreign investors alike). Take any of the top 20 indexed stocks and mark out how much Khazanah, EPF and PNB collectively hold.
That IS NOT A GOOD THING!!! A vibrant, liquid and transparent exchange is needed for it to fulfil a proper capital markets’ objectives. It has now come to a stage whereby local funds control the index … the flip side is local funds are buying because NOBODY else wants to buy.
