The sell-off in plantation stocks which dragged the KLCI to a 19-month low will continue, says the chief investment officer at UOB-OSK Asset Management
IOI Corp fell for a sixth day to its lowest in more than ten months in Malaysian trading, leading a slump by the nation’s palm oil producers after prices of the commodity extended declines on a drop in crude oil.
At mid-day close, IOI, Malaysia’s No. 2 palm oil producer, declined 20 sen to RM5.40. Kuala Lumpur Kepong Bhd, the third-biggest, lost 80 sen to RM13.00. Sime Darby Bhd, the biggest Malaysian stock by market value, declined 30 sen to RM7.45.
The sell-off in plantation stocks which dragged the benchmark Kuala Lumpur Composite Index to a 19-month low will continue, said Jason Chong, chief investment officer at UOB-OSK Asset Management in Kuala Lumpur. Palm oil futures slid for a fourth day after crude oil fell to a six-week low on July 18, reducing the appeal of palm oil as an alternative fuel.
“Because it’s very well owned by foreign investors, they’ve only started to sell now, I won’t be surprised to see more downside,” said Chong, who helps oversee US$600 million at UOB-OSK Asset Management. “People are saying that commodities prices will come off, and oil is basically taking the lead.”
CIMB Investment Bank on July 18 cut its rating on the plantation industry to “underweight” from “overweight,” saying regulatory risks and rising costs will hurt profits.
Palm oil for October delivery on the Malaysia Derivatives Exchange declined RM83, or 2.5 per cent, to RM3,309.00 (US$1,022) a metric ton, its fourth day of declines.
‘Remain Positive’
PPB Group Bhd declined 2.8 per cent to RM8.75 while Asiatic Development Bhd lost 4.8 per cent to RM6.
To be sure, the “massive sell-down” doesn’t change the industry’s outlook, analysts such as Tan Ting Min of Credit Suisse Group said
The “fundamentals remain positive, palm oil stocks will outperform over a 12-month view,” Tan said in a report today. “There is a real shortage of edible oils in the 2009 season, as global stock-to-use ratios remain very low.”
She maintained her “overweight” rating on palm oil stocks, saying it’s “one of the few ways to hedge against rising inflation.” - Bloomberg
Business Times
IOI Corp fell for a sixth day to its lowest in more than ten months in Malaysian trading, leading a slump by the nation’s palm oil producers after prices of the commodity extended declines on a drop in crude oil.
At mid-day close, IOI, Malaysia’s No. 2 palm oil producer, declined 20 sen to RM5.40. Kuala Lumpur Kepong Bhd, the third-biggest, lost 80 sen to RM13.00. Sime Darby Bhd, the biggest Malaysian stock by market value, declined 30 sen to RM7.45.
The sell-off in plantation stocks which dragged the benchmark Kuala Lumpur Composite Index to a 19-month low will continue, said Jason Chong, chief investment officer at UOB-OSK Asset Management in Kuala Lumpur. Palm oil futures slid for a fourth day after crude oil fell to a six-week low on July 18, reducing the appeal of palm oil as an alternative fuel.
“Because it’s very well owned by foreign investors, they’ve only started to sell now, I won’t be surprised to see more downside,” said Chong, who helps oversee US$600 million at UOB-OSK Asset Management. “People are saying that commodities prices will come off, and oil is basically taking the lead.”
CIMB Investment Bank on July 18 cut its rating on the plantation industry to “underweight” from “overweight,” saying regulatory risks and rising costs will hurt profits.
Palm oil for October delivery on the Malaysia Derivatives Exchange declined RM83, or 2.5 per cent, to RM3,309.00 (US$1,022) a metric ton, its fourth day of declines.
‘Remain Positive’
PPB Group Bhd declined 2.8 per cent to RM8.75 while Asiatic Development Bhd lost 4.8 per cent to RM6.
To be sure, the “massive sell-down” doesn’t change the industry’s outlook, analysts such as Tan Ting Min of Credit Suisse Group said
The “fundamentals remain positive, palm oil stocks will outperform over a 12-month view,” Tan said in a report today. “There is a real shortage of edible oils in the 2009 season, as global stock-to-use ratios remain very low.”
She maintained her “overweight” rating on palm oil stocks, saying it’s “one of the few ways to hedge against rising inflation.” - Bloomberg
Business Times
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