Share price rise likely to be temporary, say experts

KUALA LUMPUR: Felda Global Ventures Holdings Bhd’s (FGV) share price turned around yesterday after panic selling on Tuesday, but the uptrend is expected to be temporary.

The stock rose 2.47 per cent to settle at RM1.66 from Tuesday’s close of RM1.62.

Its market capitalisation stood at RM6.06 billion after having lost RM693 million from Friday to Tuesday.

Analysts reacted negatively to news of the FGV board asking group president and chief executive officer Datuk Zakaria Arshad and three others to go on leave, with the number of “sell” calls of the stock now increased to seven from five previously.

FGV had zero “buys”, 11 “holds” and five “sells” before yesterday, according to Bloomberg data.

Malaysian Association of Technical Analysts adviser Nazarry Rosli said the share price was expected to go back on a downtrend and test the support level of RM1.50 again.

“It is only a technical rebound and not the start of a bull run. The uptrend is only temporary after a sharp fall on Tuesday.

“We expect short-term profit taking to take place by shortterm traders. There is a lot of volatility to be expected before the dust settles,” he told the New Straits Times.

Kenanga Research expects negative investors’ sentiment from FGV’s board tussle to weigh down its share price in the short term.

“The move to oust Zakaria could shake up FGV’s long-term focus on its core businesses and fuel uncertainty over the group’s prospects,” it said in a note.

Kenanga Research’s recommendation on FGV is “market perform” with the target price of RM1.85 subject to review.

CIMB Research and AmResearch downgraded their calls on FGV from “hold” to “sell” yesterday with a target price of RM1.45.