Institutional interest likely supporting FGVH shares
KUALA LUMPUR, July 12 — The shares of Felda Global Ventures Holdings (FGVH), the world's second largest IPO this year continue to remain above its IPO price more than two weeks after its listing probably due to interest from institutional index funds say brokers.
FGVH soared 20 per cent above its debut price of RM5.30 when it listed on June 28 and has not traded below RM5.30 since July 2.
The shares of the GLC fell more than 2.6 per cent today to RM5.34 however in line with the slump in the FBM KLCI as regional market sentiment weakened.
This is in contrast to Facebook, the largest IPO this year which plunged 17 per cent a week after its listing in May which analysts said managed to drive many retail investors from the stock market.
Brokers say however that FGVH has likely benefited from interest from large institutional funds who anticipate the plantation giant becoming a component of the benchmark FBM KLCI index.
"It's likely index tracking funds who are buying FGVH," said one broker.
Brokers also expect FGVH's cornerstone investors, who are only allowed to sell in six months time, to take profit depending on the price.
"If the price is good, they might sell, if not they will sit on it and wait," said the broker.
Apart from its expected inclusion in the KLCI, the plantation giant also benefits from its government backing which helps bolster investor sentiment.
FGVH might also become a new proxy for the plantation sector as other major players such as the IOI group put increasing emphasis on property development.
The target price for FGVH has ranged from as low as Macquarie's RM3.85 to as high as Affin Bank's RM5.52.
Macquarie said that FGVH's aging trees and rising downstream competition could present a significant downside risk to the stock.
Affin however said that FGVH would benefit from intensive replanting as well as landbank expansion and plantation acquisitions that are expected to drive production growth.
