M’sia’s developers, banks to gain after vote
MALAYSIA’S property companies and banks including UEM Land Holdings Bhd (UEM), CIMB Group Holdings Bhd (CIMB) and IJM Corp (IJM) are set to benefit as Prime Minister Datuk Seri Najib Tun Razak’s election victory may spur more infrastructure spending.
Companies that have government ties including Astro Malaysia Holdings Bhd (Astro) and SapuraKencana Petroleum Bhd (SapuraKencana) might also gain from the poll outcome, according to a report by Bank of America Corp’s Merrill Lynch unit. CIMB, the nation’s second biggest bank by market value, is headed by Najib’s brother Nazir Razak.
The premier’s ruling Barisan Nasional coalition won 133 seats in the 222-member parliament at the May 5 polls, giving him the mandate to deliver on the US$444 billion of infrastructure and other investment plans by 2020.
The Malaysian stock gauge and currency surged the most in Asia on Monday following the election results, with the benchmark FTSE Bursa Malaysia KLCI Index (FBMKLCI) rising to a record.
Najib and his government can push through the reforms and pump in the fiscal infrastructure. David Poh, regional head of portfolio management solutions at the private banking unit of Societe Generale SA
“Najib and his government can push through the reforms and pump in the fiscal infrastructure,” David Poh, Singapore- based regional head of portfolio management solutions at the private banking unit of Societe Generale SA, which manages the equivalent of US$ 113 billion. “The whole economic growth is going to be positive.”
Idris Jala, who oversees the country’s economic transformation, said Malaysia’s pipeline of investment ‘ very healthy’. The country should have ‘very robust growth’ following the elections, Jala, minister in the Prime Minister’s department in Najib’s Cabinet before the election, said in a Bloomberg Television interview with Haslinda Amin.
UEM jumped 10.07 per cent to RM3.28 per share at closing yesterday.
The company was the best performer on the benchmark index, followed by CIMB’s 9.7 per cent increase. All 30 stocks on the gauge climbed.
The government said in 2010 it would build a mass rail network, create a shopping district to rival Singapore’s Orchard Road and add oil storage facilities as part of the US$444 billion investment plan led by the private sector to help the country achieve developed nation status by 2020.
Malaysia agreed on a high-speed railroad in February linking the capital Kuala Lumpur to its southern neighbour Singapore that might be completed by 2020. The project would help shorten the travel time between the two cities with a similar distance as New York and Washington.
The accord was the first definitive agreement to proceed with the rail project since Malaysia’s YTL Corp (YTL) said in 2006 it was in talks with the government on a proposal.
Francis Yeoh, managing director of construction and utilities group YTL, said in 2006 that he would take the rail unit public to raise as much as RM8 billion (US$2.7 billion) to fund the project if he won the contract.
CapitaLand Ltd (Capitaland), Southeast Asia’s biggest developer, said in February that it would build a S$3.2 billion (US$2.6 billion) township project in Malaysia’s Iskandar region with a business partly owned by the Johor state government and Temasek Holdings Pte (Temasek), Singapore’s state- owned investment company.
Still, the ‘narrow’ election results “indicate an increasing polarisation of the electorate,” said Tim Condon, head of research at ING Investment Management.
Najib’s coalition also faced an exodus of the minority ethnic Chinese voters in what he described as the ‘Chinese tsunami’. Among them was businessman Stanley Thai, owner of medical glovemaker Supermax Corporation Bhd (Supermax).
Chinese, who make up about a quarter of Malaysia’s population, are growing intolerant of affirmative action programmes for Malays propagated by Najib’s alliance of parties, according to the national poll last month.
“Why are the Chinese against the government – it’s simple,” Thai, 53, said in an interview. “We don’t want our children to suffer what we suffered, deprived from education, from career opportunities, from business opportunities.”
Supermax shares fell two per cent to RM1.96 on Monday, the lowest since April 4. The stock had declined 5.8 per cent since April 26, when his comments were published, compared to a 2.7 per cent gain in the benchmark index.
Builders such as IJM and Gamuda Bhd (Gamuda) are expected to gain as most of the domestic companies should have ‘plenty’ of new jobs on their plate for the next few years, including mass rail projects, Nomura Holdings Inc wrote in a note yesterday.
UEM, the country’s biggest property developer by market value and majority-owned by Khazanah Nasional Bhd (Kazanah), would continue to deliver strong results because of its projects in the country’s southern region of Iskandar, Nomura analysts led by Wai Kee Choong and Julian Chua wrote in the note.
“Broad policy continuity under Barisan Nasional should sustain Malaysia’s growth momentum over the medium term,” Terence Wong, the Kuala Lumpur-based head of research at CIMB, wrote in a recent report.
“Businesses and investors will breathe a sigh of relief as Malaysia will have another four to five years of Barisan Nasional.” — Bloomberg