Koh Huat Soon, who runs Pacific Mutual Fund Bhd’s RM2.2 billion in assets, told Reuters he favoured Malaysian O&G companies that were likely to secure contracts from the government’s $444 billion flagship economic reform programme.
“Positive news flow from the ETP is gathering steam,” said Koh, who is also Pacific Mutual’s chief investment officer. “We like the companies in the O&G and construction sectors that are bound to be the major recipients for the jobs. We also like O&G merger and acquisition candidates.”
Pacific Mutual, a unit of Singapore’s Overseas-Chinese Banking Corporation Ltd, was named the best equity global fund for both three and five years as well as the best equity Malaysia Islamic fund over 10 years at The Edge-Lipper Fund Awards 2012 this week.
The ETP, launched by Prime Minister Datuk Seri Najib Razak in September 2010, is a government initiative aimed at transforming Malaysia into a high income economy by 2020.
The programme aims to revitalise Malaysia’s private sector by identifying key economic sectors such as O&G and construction for development.
ETP-related contracts have started to be dished out. Construction firm Kimlun Corp Bhd announced on February 8 it won a RM223.2 million contract from Mass Rapid Transit Corp to supply parts to the rail network expansion project.
Apart from the O&G and construction sectors, Pacific Mutual also favours Malaysia’s plantations and forestry industries.
“We like the (plantation) industry as we expect crude palm oil prices to trade higher than last year. We expect the prices to range between 3,200 to 3,300 ringgit (a tonne) as we foresee some production shortfall due to bad weather condition,” Koh said.
Malaysia’s stock market was getting more expensive relative to its historical valuations and regional peers after achieving the third-best gains in Asia last year, said Koh.
“It’s no longer cheap,” he said. “Let’s not forget that the general election is coming and there is going to be a premium risk added in to it. Investors are likely to be a little bit nervous when the election is called.”
Najib is widely expected to call the elections this year ahead of the end of his mandate in April 2013. Four years ago, unexpectedly strong opposition gains in the election prompted a 10-percent morning drop on the Kuala Lumpur Composite Index , triggering a trading halt.
“The best outcome for the market is a decisive and overwhelming victory rather than a simple majority win,” said Koh, referring to the winning margin for the ruling coalition. — Reuters
