Mahathir: Some Malaysian state-owned entities may be listed

Some analysts have speculated the Malaysian government could list a small portion of its stake in state energy firm Petronas to generate revenue. (Reuters)
Updated 19 March 2019
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Mahathir: Some Malaysian state-owned entities may be listed

  • Malaysia is saddled with debt and liabilities of more than 1 trillion ringgit ($245.52 billion)
  • A government panel to cut debt is looking at strategies

KUALA LUMPUR: Malaysia may list certain state-owned entities to cut government debt and liabilities, Prime Minister Mahathir Mohamad said on Tuesday as it seeks new revenue sources to boost its fiscal position.
Mahathir, elected in a stunning upset last year, has blamed the previous administration of Najib Razak for saddling Malaysia with debt and liabilities of more than 1 trillion ringgit ($245.52 billion).
A government panel to cut debt is looking at strategies, such as “identification of opportunities on potential asset monetization, which means mature unlisted government entities may be listed in the stock market,” he said.
State-linked companies could also pare equity stakes, he told a conference of investors in Kuala Lumpur.
“The key guiding principles for monetising any of our assets is that the disposal or monetization must never be done at fire-sale prices, and any disposal of shares, monetization of assets, auctions or other measures will be done in an orderly manner.”
He did not identify specific companies or fix a timeframe for the plan, however.
Sovereign wealth fund Khazanah Nasional announced a new strategy this month, saying it was gearing up to be a “long-term real return provider” to the government through its commercial investments.
Last month Reuters reported, citing sources, that Khazanah’s new strategy aimed at delivering more cash to the government by pruning stakes in non-strategic assets.
Some analysts have also speculated the government could list a small portion of its stake in state energy firm Petronas to generate revenue.
Petronas is the sole manager of Malaysia’s oil and gas reserves. Although some of its subsidiaries are listed on the national stock exchange, Petronas is fully owned by the government.
Finance Minister Lim Guan Eng said last year the government had no immediate plans to sell stakes in state-owned companies, but did not rule out the possibility in the future.
Lim and Mahathir have blamed corruption scandals in the previous administration for Malaysia’s large debts. The fiscal situation was also hurt after the new government scrapped an unpopular consumption tax, in line with a campaign promise.
Former premier Najib has been slapped with dozens of corruption charges since his defeat in May 2018, many related to alleged money laundering at state fund 1MDB.
He has pleaded not guilty and has consistently denied any wrongdoing.


Debut of China’s Nasdaq-style board adds $44bn in market cap

Updated 22 July 2019
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Debut of China’s Nasdaq-style board adds $44bn in market cap

  • Activity draws attention away from main board

BEIJING: Trading on China’s new Nasdaq-style board for homegrown tech firms hit fever pitch on Monday, with shares up as much as 520 percent in a wild debut that more than doubled the exchange’s combined market capitalization and beat veteran investors’ expectations.

Sixteen of the first batch of 25 companies — ranging from chip-makers to health care firms — increased their already frothy initial public offering (IPO) prices by 136 percent on the STAR Market, operated by the Shanghai Stock Exchange.

The raucous first day of trade tripped the exchange’s circuit breakers that are designed to calm frenzied activity. The weakest performer leapt 84.22 percent. In total, the day saw the creation of around 305 billion yuan ($44.3 billion) in new market capitalization on top of an initial market cap of around 225 billion yuan, according to Reuters’ calculations.

“The price gains are crazier than we expected,” said Stephen Huang, vice president of Shanghai See Truth Investment Management. “These are good companies, but valuations are too high. Buying them now makes no sense.”

Modelled after Nasdaq, and complete with a US-style IPO system, STAR may be China’s boldest attempt at capital market reforms yet. It is also seen driven by Beijing’s ambition to become technologically self-reliant as a prolonged trade war with Washington catches Chinese tech firms in the crossfire.

Trading in Anji Microelectronics Technology (Shanghai) Co. Ltd., a semiconductor firm, was briefly halted twice as the company’s shares hit two circuit breakers — first after rising 30 percent, then after climbing 60 percent from the market open.

HIGHLIGHTS

• 16 of 25 STAR Market firms more than double from IPO price.

• Weakest performer gains 84 percent, average gain of 140 percent.

• STAR may be China’s boldest attempt at capital market reforms yet.

The mechanisms did little to keep Anji shares in check as they soared as much as 520 percent from their IPO price in the morning session. Anji shares ended the day up 400.2 percent from their IPO price, the day’s biggest gain, giving the company a valuation of nearly 242 times 2018 earnings.

Suzhou Harmontronics Automation Technology Co. Ltd., in contrast, triggered its circuit breaker in the opposite direction, falling 30 percent from the market open in early trade before rebounding. But by the market close, the company’s shares were still 94.61 percent higher than their IPO price.

Wild share price swings, partly the result of loose trading rules, had been widely expected. IPOs had been oversubscribed by an average of about 1,700 times among retail investors.

The STAR Market sets no limits on share prices during the first five days of a company’s trading. That compares with a cap of 44 percent on debut on other boards in China.

In subsequent trading sessions, stocks on the new tech board will be allowed to rise or fall a maximum 20 percent in a day, double the 10 percent daily limit on other boards.

Regulators last week cautioned individual investors against “blindly” buying STAR Market stocks, but said big fluctuations were normal.

Looser trading rules were aimed at “giving market players adequate freedom in the game, accelerating the formation of equilibrium prices, and boosting price-setting efficiency,” the Shanghai Stock Exchange (SSE) said in a statement on Friday.

The SSE added that it was normal to see big swings in newly listed tech shares, as such companies typically have uncertain prospects, and are difficult to evaluate.