Reports » Malaysia

Malaysia stock market and companies daily report (September 21, 2012)

Contributed by Shares Investment

TRX Draws Strong Global Interest
The Tun Razak Exchange (TRX) prospects are looking bright given the encouraging initial demand from multinational financial institutions which view the exchange as an avenue to set up new hubs to support future growth. The multi-billion ringgit development which is located at the heart of Kuala Lumpur will begin its first phase of construction in the middle of next year, and  is estimated to generate a gross development value (GDV) of between RM5 billion and RM6 billion in this phase. As a whole, TRX is projected to generate a GDV of RM26 billion over its 15-20 years of development. According to UOB Kay Hian, the TRX will be the new international hub for finance and professional services which would house a mix of government institutions, top global institutions and support services companies.  As of now, TRX’s developer, 1MDB’s management had highlighted that infrastructure cost is estimated to be RM2 billion without a decided source of funding.
Significance: 1MDB is seeking joint venture partners to help develop the TRX. Potential construction companies include Boustead Group, WCT Bhd and Mudajaya Group. Furthermore, the megaproject would benefit those who have developments or land banks around the area, such as Sunway Group and Boustead.

KL Picked As Schlumberger’s Asia Pacific Hub
Schlumberger Ltd, the world’s largest oilfield services company has decided to set up a hub for the Asia Pacific region in Malaysia based on the nation’s positive business outlook. The company’s Asia pacific chairman was attracted to Malaysia’s government support and incentives for oil and gas services companies, in particular Petroliam National’s (Petronas) strong relationships with its production sharing contract (PSC) partners. He stated, with the government backing of Petronas, it would attract most multinational companies and especially oil and gas players. Schlumberger, which is listed on the New York stock exchange, generates close to US$40 billion of annual revenue a year, and according to 33 estimates by analysts tracking the stock. The company’s earnings are forecasted to grow 19 percent by the end of 2013.
Significance: Schlumberger’s decision sets to prove Malaysia’ ability to compete with other regions in attracting the very best companies to set up regional bases. The company, which began operations in Malaysia in 1974, had also opened a regional financial hub last year in the country.

Palm Oil Futures Drops, Losses Capped by Exports
Malaysian palm oil futures fell on Thursday, 20 September as the world’s second largest edible oils buyer, China continues to have an economic slump in growth. Meanwhile news of better-than-expected soy yields in the United States continued to drag down prices. Potential inventory levels exceeding 2.2 million tonnes in September threatened to offset strong exports. Export shipments climbed almost 15 percent during the first 3 weeks of September when compared to the same period a month ago. Futures traded in a tight range between RM2,841 and RM2,871 , as investor sentiment remained bearish. Palm oil prices fell to a one-week low trailing soybeans lower on expectations for crop yields across the drought-stricken U.S. Midwest to beat forecasts. Additionally, crude oil dropped for a fourth straight day, weakening the appeal of biofuels. Also weighing down prices was preliminary data that showed manufacturing in China may shrink for the 11th month straight, indicating the economy remains on track for a seventh quarter of slowing growth.
Significance: The current market is trying to hold where production pace normally picks up during the July to October period. With the prolonged global economic slowdown, prices will be under pressure to fall further.