KUALA LUMPUR:
2011 Prospect : M&A
This year is poised to be an exciting one for local oil and gas (O&G) players on the back of improving prospects as crude oil prices continue to rise, with observers saying this could also mean more mergers and acquisitions (M&A) within the sector.
Local analysts have been forecasting that this year will see several major trends, including bigger orderbooks and tenders in the pipeline, strategic partnerships being announced and more corporate exercises including mergers, take-overs and capital-raising activities taking place.
News of oil major Petroliam Nasional Bhd (Petronas) opening up marginal oilfields to niche players, as well as five new tax incentives to encourage domestic exploration activities created some excitement in the market, with many O&G counters seeing increased investor attention.
The exploration activities are set to benefit hook-up and commissioning (HUC) job players such as SapuraCrest Petroleum Bhd, Kencana Petroleum Bhd and Petra Energy Bhd, as well as fabrication yard operators who are also poised for a consolidation, according to UOBKayHian.
“Malaysia Marine and Heavy Engineering Holdings Bhd’s (MMHE) yard in Johor is currently operating at full capacity, and additional yard capacity and size would fuel its growth,” it said in its January 2011 strategy report.
“MMHE could be looking into Sime Darby’s assets or even other Petronas-licensed smaller fabrication yards that are less well run, such as Oilcorp Bhd which is facing solvency issues.”
Maybank Investment Bank Research reiterated the view, saying it expected the number of offshore fabricators to contract to two from six at present.
“We think MMHE, 65% held by MISC Bhd and ultimately Petronas, will be an acquirer. Ramunia and Sime Engineering, 100%-owned by Sime Darby are the likely targets,” it said.
“In addition, we foresee new assets/businesses being injected into Ramunia and Scomi Marine, both PN 17 counters (i.e. cash rich, but without a core business).”
Potential target M&A
In addition to fabricators, Maybank IB Research also highlighted several marine vessel operators as potential acquisition targets, namely Alam Maritim Resources Bhd, Petra Perdana Bhd and Tanjung Offshore Bhd, as well as private limited offshore support vessel provider Jasa Merin (M) Sdn Bhd, whose parent company is SILK Holdings Bhd.
“These operators have undemanding valuations but stretched balance sheets with high gearing levels, which complicate their growth prospects,” it said in a Jan 7, 2011 note.
The brokerage firm also highlighted that cash-rich SapuraCrest could be keen on acquiring marine vessels as a strategic asset to complement its installation of pipeline and facilities (IPF) operations.
UOBKayHian had also highlighted SapuraCrest’s eligibility as a potential M&A target, due to its ability to fund its expansion plans easily across the entire O&G upstream value chain.
Another possible acquirer could be Ekuiti Nasional Bhd (Ekuinas), as it may be looking to accelerate consolidation among bumiputera marine vessel owners, according to Maybank IB Research, saying it is likely to start with Tanjung Offshore, in which it has a 24% equity interest.
“The key driver of consolidation in this sector by Ekuinas is to create a stronger entity both in terms of size and financials,” an analyst told The Edge Financial Daily. “At present, most vessel players are highly geared with limited room for expansion.”
Meanwhile, market speculation had also recently surfaced that Alam Maritim Resources Bhd could be in the preliminary stages of exploring a working relationship with Coastal Contracts Bhd.
An industry source told The Edge Financial Daily that the partnership could prove promising as there did not appear to be an overlap in their businesses.
Alam Maritim is primarily involved in the supply of offshore supply vessels for the O&G sector as well as underwater services. Meanwhile, Coastal is a Sandakan-based company whose areas of business include vessels manufacturing and chartering.
“Catalysts for cooperation include Coastal’s fabrication shipyard and the Sabah connection, while Alam Maritim has been said to be game for strategic tie-ups,” the source said. “Main issues would be pricing and control of management.”
Maybank IB Research also highlighted upcoming high-impact projects in Sabah, including the Sabah Oil and Gas Terminal, Sabah-Sarawak Gas Pipeline, Sipitang O&G Industrial Park as well as Petronas Chemicals Group Bhd’s ammonia and urea plants.
It is worth noting that pilgrim fund Lembaga Tabung Haji (LTH) is a common shareholder in both Coastal and Alam Maritim, albeit with non-controlling stakes.
LTH has 72.56 million shares in Alam Maritim, representing a 9.29% stake, while it has 18.2 million shares in Coastal, representing a 5.02% equity interest.
(Source : The Edge Financial Daily, January 10, 2011)
Sunday, January 30, 2011
Thursday, January 27, 2011
The World's Biggest Gold Reserves
15. Venezuela
Value of Reserves: $17.33 billion
Holdings Total: 401.1 tons
Banco Central de Venezuela manages the 401.1 tons of gold in the country’s reserves, which amount to approximately $17.33 billion, representing 52.4 percent of the country's foreign reserves.
Although Venezuela currently has the fifteenth on the list, it has been increasing its holdings since 2009, when president Hugo Chavez introduced new policies to promote gold extraction and boost the country's ranking
14. Portugal
Value of Reserves: $18.21 billion
Holdings Total: 421.6 tons
The westernmost nation in mainland Europe is home to the fourteenth largest gold reserve in the world. At 421.6 tons, Portugal’s holdings are overseen by Banco de Portugal and are worth roughly $18.21 billion, accounting for 81.1 percent of the country’s foreign reserves.
13. Taiwan
Value of Reserves: $20.17 billion
Holdings Total: 466.9 tons
Renowned for its technology industry and robust economic growth, Taiwan also boasts one of the largest gold reserves in the world.
The Central Bank of the Republic of China (Taiwan) manages the island nation’s foreign reserves, which have been reported at 466.9 tons. These holdings are worth $20.17 billion at today's prices and comprise approximately 4.6 percent of the country's foreign reserves
12. European Central Bank (ECB)
Value of Reserves: $23.88 billion
Holdings Total: 522.7 tons
Established in 1998 by the European Union, the European Central Bank is responsible for the monetary policy of the member nations of the Eurozone and is headquartered in Frankfurt, Germany.
The ECB's 522.7 tons of gold accounts for 25.2 percent of the bank's foreign reserves and would be worth $23.88 billion in today's market.
11. India
Value of Reserves: $26.56 billion
Holdings Total: 614.8 tons
Shooting up in the rankings in the past years is India. The second most populous nation in the world maintains the eleventh largest gold reserves. The size of India's holdings were bolstered in November 2009 by a $6.9 billion purchase of 200 tons of gold from the IMF.
The Reserve Bank of India oversees the country’s 614.8 tons of gold, which are valued at $26.56 billion, comprising 8.1% of its foreign reserves. India’s current ranking may also continue to move upwards, as the government has asked the Geological Survey of India to mine the previously untapped gold reserves in many of its states.
10. Netherlands
Value of Reserves: $29.67 billion
Holdings Total: 675.2 tons
The Netherlands has the tenth largest reserve on the list with 675.2 tons of gold. The Netherland Bank manages the country’s national finances, including the gold reserves, which amount to approximately $26.67 billion and account for 57.5 percent of the country's foreign reserves.
9. Japan
Value of Reserves: $36.43 billion
Holdings Total: 843.5 tons
Although Japan is ninth on the list, its 843.5 tons of gold account for only 3 percent of total foreign reserves. On the open market, Japan's gold reserves are worth around $36.43 billion, and are overseen by the Bank of Japan.
8. Russia
Value of Reserves: $36.91 billion
Holdings Total: 854.5 tons
The Central Bank of the Russian Federation is in charge of the country’s 854.5 tons of gold, which are valued at $36.91 billion and comprise 6.7% of the country’s foreign reserves.
In 2009 Russia increased its gold production by 21%, due in part to the launch of several new mines, and this past year overcame Japan in total holdings, adding over 140 tons to its stockpile in 2010 alone.
7. Switzerland
Value of Reserves: $49.53 billion
Holdings Total: 1,146.5 tons
The Swiss National Bank conducts Switzerland's monetary policy and manages the country's 1,146.5 tons of gold.
With the world's seventh largest reserve of the precious metal, Switzerland's supply is worth approximately $49.53 billion in today's gold market, accounting for 16.4 percent of the country's foreign reserves. This proportion is down significantly from a year earlier.
6. China
Value of Reserves: $50.19 billion
Holdings Total: 1,161.9 tons
At 1,161.9 tons, the world's most heavily populated country has the world's sixth largest gold reserve. Expect it to be higher? Well, bear in mind that China's gold only accounts for 1.7 percent of its foreign reserves. With a population of 1.34 billion, the country holds about $37.45 worth of gold per person, totaling $50.19 billion.
5. France
Value of Reserves: $115.97 billion
Holdings Total: 2,684.6 tons
The French National Bank, Banque De France, is home to the country's gold holdings, which comprise 67.2 percent of its foreign reserves. With 2,684.6 tons of gold in reserve, France's holdings are worth approximately $115.97 billion.
4. Italy
Value of Reserves: $116.75 billion
Holdings Total: 2,702.6 tons
The Banca D'Italia manages Italy's foreign reserves, which have been reported at 2,702.6 tons by the World Gold Council and comprise the fourth largest gold reserve in the world.
These holdings are worth $116.75 billion and account for 68.6 percent of the country's foreign reserves.
3. International Monetary Fund (IMF)
Value of Reserves: $135.56 billion
Holdings Total: 3,137.9 tons
The IMF oversees international economic operations of 185 member countries. Its gold policies have changed in the last 25 years, but the reserves remain to stabilize international markets and aid national economies.
In one such instance, it sold a portion of its reserves in December 1999 to aid the Heavily Indebted Poor Countries (HIPC) Initiative. The 3,137.9 tons of IMF Gold would fetch roughly $135.5 billion in today's market.
2. Germany
Value of Reserves: $161.99 billion
Holdings Total: 3,749.8 tons
The Deutsche Bundesbank, Germany's central bank, has 3,749.8 tons of gold reserves, which are valued at about $161.99 billion. According to the World Gold Council, Germany’s gold coffers account for 70.3 percent of total foreign reserves.
1. United States
Value of Reserves: $387.32 billion
Holdings Total: 8,965.6 tons
The United States Bullion Depository in Kentucky — otherwise known as Fort Knox — is the most famous gold stockpile in the world. It holds the majority of the nation’s gold reserves, the remainder of which is held at the Philadelphia Mint, the Denver Mint, the West Point Bullion Depository and the San Francisco Assay Office.
Altogether, the total gold reserves of the United States equal 8,965.6 tons and would be valued at approximately $387.32 billion in today's market.
(Source : CNBC)
Value of Reserves: $17.33 billion
Holdings Total: 401.1 tons
Banco Central de Venezuela manages the 401.1 tons of gold in the country’s reserves, which amount to approximately $17.33 billion, representing 52.4 percent of the country's foreign reserves.
Although Venezuela currently has the fifteenth on the list, it has been increasing its holdings since 2009, when president Hugo Chavez introduced new policies to promote gold extraction and boost the country's ranking
14. Portugal
Value of Reserves: $18.21 billion
Holdings Total: 421.6 tons
The westernmost nation in mainland Europe is home to the fourteenth largest gold reserve in the world. At 421.6 tons, Portugal’s holdings are overseen by Banco de Portugal and are worth roughly $18.21 billion, accounting for 81.1 percent of the country’s foreign reserves.
13. Taiwan
Value of Reserves: $20.17 billion
Holdings Total: 466.9 tons
Renowned for its technology industry and robust economic growth, Taiwan also boasts one of the largest gold reserves in the world.
The Central Bank of the Republic of China (Taiwan) manages the island nation’s foreign reserves, which have been reported at 466.9 tons. These holdings are worth $20.17 billion at today's prices and comprise approximately 4.6 percent of the country's foreign reserves
12. European Central Bank (ECB)
Value of Reserves: $23.88 billion
Holdings Total: 522.7 tons
Established in 1998 by the European Union, the European Central Bank is responsible for the monetary policy of the member nations of the Eurozone and is headquartered in Frankfurt, Germany.
The ECB's 522.7 tons of gold accounts for 25.2 percent of the bank's foreign reserves and would be worth $23.88 billion in today's market.
11. India
Value of Reserves: $26.56 billion
Holdings Total: 614.8 tons
Shooting up in the rankings in the past years is India. The second most populous nation in the world maintains the eleventh largest gold reserves. The size of India's holdings were bolstered in November 2009 by a $6.9 billion purchase of 200 tons of gold from the IMF.
The Reserve Bank of India oversees the country’s 614.8 tons of gold, which are valued at $26.56 billion, comprising 8.1% of its foreign reserves. India’s current ranking may also continue to move upwards, as the government has asked the Geological Survey of India to mine the previously untapped gold reserves in many of its states.
10. Netherlands
Value of Reserves: $29.67 billion
Holdings Total: 675.2 tons
The Netherlands has the tenth largest reserve on the list with 675.2 tons of gold. The Netherland Bank manages the country’s national finances, including the gold reserves, which amount to approximately $26.67 billion and account for 57.5 percent of the country's foreign reserves.
9. Japan
Value of Reserves: $36.43 billion
Holdings Total: 843.5 tons
Although Japan is ninth on the list, its 843.5 tons of gold account for only 3 percent of total foreign reserves. On the open market, Japan's gold reserves are worth around $36.43 billion, and are overseen by the Bank of Japan.
8. Russia
Value of Reserves: $36.91 billion
Holdings Total: 854.5 tons
The Central Bank of the Russian Federation is in charge of the country’s 854.5 tons of gold, which are valued at $36.91 billion and comprise 6.7% of the country’s foreign reserves.
In 2009 Russia increased its gold production by 21%, due in part to the launch of several new mines, and this past year overcame Japan in total holdings, adding over 140 tons to its stockpile in 2010 alone.
7. Switzerland
Value of Reserves: $49.53 billion
Holdings Total: 1,146.5 tons
The Swiss National Bank conducts Switzerland's monetary policy and manages the country's 1,146.5 tons of gold.
With the world's seventh largest reserve of the precious metal, Switzerland's supply is worth approximately $49.53 billion in today's gold market, accounting for 16.4 percent of the country's foreign reserves. This proportion is down significantly from a year earlier.
6. China
Value of Reserves: $50.19 billion
Holdings Total: 1,161.9 tons
At 1,161.9 tons, the world's most heavily populated country has the world's sixth largest gold reserve. Expect it to be higher? Well, bear in mind that China's gold only accounts for 1.7 percent of its foreign reserves. With a population of 1.34 billion, the country holds about $37.45 worth of gold per person, totaling $50.19 billion.
5. France
Value of Reserves: $115.97 billion
Holdings Total: 2,684.6 tons
The French National Bank, Banque De France, is home to the country's gold holdings, which comprise 67.2 percent of its foreign reserves. With 2,684.6 tons of gold in reserve, France's holdings are worth approximately $115.97 billion.
4. Italy
Value of Reserves: $116.75 billion
Holdings Total: 2,702.6 tons
The Banca D'Italia manages Italy's foreign reserves, which have been reported at 2,702.6 tons by the World Gold Council and comprise the fourth largest gold reserve in the world.
These holdings are worth $116.75 billion and account for 68.6 percent of the country's foreign reserves.
3. International Monetary Fund (IMF)
Value of Reserves: $135.56 billion
Holdings Total: 3,137.9 tons
The IMF oversees international economic operations of 185 member countries. Its gold policies have changed in the last 25 years, but the reserves remain to stabilize international markets and aid national economies.
In one such instance, it sold a portion of its reserves in December 1999 to aid the Heavily Indebted Poor Countries (HIPC) Initiative. The 3,137.9 tons of IMF Gold would fetch roughly $135.5 billion in today's market.
2. Germany
Value of Reserves: $161.99 billion
Holdings Total: 3,749.8 tons
The Deutsche Bundesbank, Germany's central bank, has 3,749.8 tons of gold reserves, which are valued at about $161.99 billion. According to the World Gold Council, Germany’s gold coffers account for 70.3 percent of total foreign reserves.
1. United States
Value of Reserves: $387.32 billion
Holdings Total: 8,965.6 tons
The United States Bullion Depository in Kentucky — otherwise known as Fort Knox — is the most famous gold stockpile in the world. It holds the majority of the nation’s gold reserves, the remainder of which is held at the Philadelphia Mint, the Denver Mint, the West Point Bullion Depository and the San Francisco Assay Office.
Altogether, the total gold reserves of the United States equal 8,965.6 tons and would be valued at approximately $387.32 billion in today's market.
(Source : CNBC)
Monday, January 24, 2011
Stop Press : US Debt to GDP and The Euro ..
Jan 24, 2011 5:00 PM GMT+0800
U.S. federal government debt will climb to 99 percent of gross domestic product this year from 93 percent in 2010, while the euro region will total 87 percent, according to International Monetary Fund forecasts ..
The EU has already agreed to bail out Greece and Ireland, and bond investors are concerned Portugal, and possibly Belgium and Spain may be next. Portugal 10-year yields have reached the 7 percent mark that preceded Ireland and Greece’s aid requests.
Bonds yields are still sending danger signals to some of the most-accurate forecasters, who say the rebound won’t last. Wells Fargo & Co., the best foreign-exchange predictor in the 18 months ended Dec. 31, expects a drop to $1.25 by year- end. John Taylor, chairman of the world’s largest currency hedge-fund firm, FX Concepts LLC, said on Jan. 5 the euro may fall below parity with the dollar this year.
Finance ministers from Europe’s top-rated countries, Germany, France, Austria, the Netherlands, Finland and Luxembourg, met on Jan. 17 to discuss strengthening the rescue fund. A “comprehensive package” will be assembled by March, Finance Minister Wolfgang Schaeuble said Jan. 13.
China, which has the world’s largest foreign-currency reserves, said this month it plans to buy securities from the region’s most-indebted countries. Japan said on Jan. 11 it will purchase bonds issued by one of Europe’s bailout funds, while Russia, holder of almost $500 billion of reserves, said it may do the same on Jan. 18
Euro-dollar three-month risk reversals, which measure demand for options to sell the single currency relative to those that allow for purchases, declined to 1.325 on Jan. 13 from 2.150 on Jan. 7, the fastest drop since the three days ended Sept. 16, according to data compiled by Bloomberg. The euro rallied from $1.2644 on Sept. 10 to about a 10-month high of $1.4282 on Nov. 4.
(Source : Bloomberg)
U.S. federal government debt will climb to 99 percent of gross domestic product this year from 93 percent in 2010, while the euro region will total 87 percent, according to International Monetary Fund forecasts ..
The EU has already agreed to bail out Greece and Ireland, and bond investors are concerned Portugal, and possibly Belgium and Spain may be next. Portugal 10-year yields have reached the 7 percent mark that preceded Ireland and Greece’s aid requests.
Bonds yields are still sending danger signals to some of the most-accurate forecasters, who say the rebound won’t last. Wells Fargo & Co., the best foreign-exchange predictor in the 18 months ended Dec. 31, expects a drop to $1.25 by year- end. John Taylor, chairman of the world’s largest currency hedge-fund firm, FX Concepts LLC, said on Jan. 5 the euro may fall below parity with the dollar this year.
Finance ministers from Europe’s top-rated countries, Germany, France, Austria, the Netherlands, Finland and Luxembourg, met on Jan. 17 to discuss strengthening the rescue fund. A “comprehensive package” will be assembled by March, Finance Minister Wolfgang Schaeuble said Jan. 13.
China, which has the world’s largest foreign-currency reserves, said this month it plans to buy securities from the region’s most-indebted countries. Japan said on Jan. 11 it will purchase bonds issued by one of Europe’s bailout funds, while Russia, holder of almost $500 billion of reserves, said it may do the same on Jan. 18
Euro-dollar three-month risk reversals, which measure demand for options to sell the single currency relative to those that allow for purchases, declined to 1.325 on Jan. 13 from 2.150 on Jan. 7, the fastest drop since the three days ended Sept. 16, according to data compiled by Bloomberg. The euro rallied from $1.2644 on Sept. 10 to about a 10-month high of $1.4282 on Nov. 4.
(Source : Bloomberg)
Friday, January 21, 2011
Washington Post Largest Shareholders and Warrent Buffett
Billionaire Warren Buffett is retiring from the board of Washington Post Co., the publishing company in which his Berkshire Hathaway Inc. is the largest shareholder.
Buffett, who joined the board in 1974, will remain a director until the end of his term in May and won’t seek re- election, Washington Post said today in a statement distributed by Business Wire. He’ll continue to consult with the company.
Buffett, 80, is preparing Omaha, Nebraska-based Berkshire for his eventual departure. Last year, the company announced the addition of money manager Todd Combs to help oversee investments. Buffett stepped down from the board of Coca-Cola Co. in 2006, and the soft-drink maker said in December that his son Howard Buffett was becoming a director.
Washington Post gained $2.61 to $426 at 1:44 p.m. in New York Stock Exchange composite trading. Berkshire was little changed.
Buffett, Berkshire’s chairman, chief executive officer and biggest shareholder, built the company over four decades. He launched a succession plan in 2006. Buffett oversees more than 70 operating units and an investment portfolio that contains the biggest stakes in Wells Fargo & Co. and Atlanta-based Coca-Cola.
Melinda French Gates, who runs the Bill & Melinda Gates Foundation with her husband, Microsoft Corp.’s co-founder, stepped down from Washington Post’s board in November.
The Washington Post newspaper’s average weekday readership was 545,345 in the six months through September, down 6.4 percent from a year earlier, according to Audit Bureau of Circulations data. That compares with a 5 percent drop industrywide.
(source : Bloomberg)
Buffett, who joined the board in 1974, will remain a director until the end of his term in May and won’t seek re- election, Washington Post said today in a statement distributed by Business Wire. He’ll continue to consult with the company.
Buffett, 80, is preparing Omaha, Nebraska-based Berkshire for his eventual departure. Last year, the company announced the addition of money manager Todd Combs to help oversee investments. Buffett stepped down from the board of Coca-Cola Co. in 2006, and the soft-drink maker said in December that his son Howard Buffett was becoming a director.
Washington Post gained $2.61 to $426 at 1:44 p.m. in New York Stock Exchange composite trading. Berkshire was little changed.
Buffett, Berkshire’s chairman, chief executive officer and biggest shareholder, built the company over four decades. He launched a succession plan in 2006. Buffett oversees more than 70 operating units and an investment portfolio that contains the biggest stakes in Wells Fargo & Co. and Atlanta-based Coca-Cola.
Melinda French Gates, who runs the Bill & Melinda Gates Foundation with her husband, Microsoft Corp.’s co-founder, stepped down from Washington Post’s board in November.
The Washington Post newspaper’s average weekday readership was 545,345 in the six months through September, down 6.4 percent from a year earlier, according to Audit Bureau of Circulations data. That compares with a 5 percent drop industrywide.
(source : Bloomberg)
Major Correction In KLSE is Looming Soon ?
Stop Press on KLSE .....
Recent rise in majority stocks raise concern that the good time might be ending soon. As KLSE continue to break new historical high as well as ultra high volumn speak for itself that the danger is in the making that there is a concern of major correction is on its way. Time to retrieve and keep your "bullet"....
Recent rise in majority stocks raise concern that the good time might be ending soon. As KLSE continue to break new historical high as well as ultra high volumn speak for itself that the danger is in the making that there is a concern of major correction is on its way. Time to retrieve and keep your "bullet"....
Saturday, January 15, 2011
Malaysia Major Stock Broking Houses And The Way Forward ....
KUALA LUMPUR: Friday, 14 January 2011 12:09
Olympia Industries Bhd and Kretam Holdings Bhd — announced that their standalone stockbroking units had received the Securities Commission’s (SC) nod to undertake activities accorded to a 1+1 stockbroking company.
They were given the 1+1 status, which allows them to open branches, provide electronic access facilities and undertake structured products offerings, without having to conduct a merger with another player.
According to both companies’ announcements, the approvals given to Jupiter Securities Sdn Bhd and Innosabah Securities Bhd, owned by Olympia and Kretam respectively, were provided under the Alternative Mechanism to Fulfilling the Consolidation Requirement Under the Policy Framework for Stockbroking Industry Consolidation.
In a reply to queries by The Edge Financial Daily recently, a SC spokesperson said the “alternative mechanism” represented the conclusion to the Consolidation Policy that was initiated in April 2000.
Standalone brokers can now get 1+1 status with access to more revenue-generating ops.
While the alternative mechanism is not a new policy, this is the first time that the SC has actually utilised the mechanism to give a lift-up to standalone stockbroking firms, which had failed to undertake a 1+1 merger as per the SC’s initiatives 10 years ago and thus had been left out of the opportunities to expand their business via opening more branches.
“This will effectively enhance the value of these stockbroking companies, as they now have access to more revenue-generating operations without having to pay premium in acquiring another standalone stockbroking company,” an industry observer said, adding that some of these standalone stockbrokers now stand a better chance of attracting suitors from abroad.
The alternative mechanism was seen as a second chance for standalone broking firms. Currently, only six standalone stockbroking companies remain in the country. They are BIMB Securities Sdn Bhd, FA Securities Sdn Bhd, Innosabah, Jupiter Securities, Malacca Securities Sdn Bhd and SJ Securities Sdn Bhd.
Some of these firms had attempted mergers previously. In 2001, Jupiter Securities was in talks to acquire Innosabah to tap into the Sabah equities market. However, the agreement lapsed in 2002.
There are 26 non-bank backed “capital market intermediaries” currently. These comprise one universal broker (PM Securities), six 1+1 brokers (including TA Securities, Interpacific Securities and Apex Securities), six standalone investment banks (including OSK Investment Bank and Kenanga Investment Bank), seven foreign stockbroking outfits (such as CLSA, UBS and JP Morgan), and six standalone brokers.
However, there are certain criteria that standalone brokers would have to meet for the 1+1 status to be accorded.
The SC spokesperson said the alternative mechanism required standalone stockbroking companies to commit investments to strengthen their operational framework and to contribute to an industry development fund. The regulator, however, was mum on the amount of funds that these brokerage outfits are required to commit.
The brokers are required to allocate a budget to enhance the current front office system by investing in a new order management system within three years of the development plan. This is to strengthen these firms’ operation framework and promote investment in the stock market.
The SC would only formally recognise their 1+1 status when all the conditions are met.
Standalone brokers were required to have a minimum paid-up capital of RM20 million and shareholders’ funds of RM20 million. Nonetheless, their expansion was capped as they were not allowed to open branches or offer other products and services apart from broking activities.
Since 2000, some of the stockbroking companies such as OSK and Kenanga had moved on to become full-fledged investment banks, which require an even higher minimum paid-up capital of RM500 million. Fast track into 2011, firms like OSK not only have operations in Malaysia but is known as a regional financial services firm with branches in Singapore, Hong Kong and Indonesia.
“No doubt standalone brokers had avoided paying a steep premium for the 1+1 status. But as they were unable to expand over the last 10 years, they have lost a lot of business opportunities to their old rivals, which have grown much bigger. They will have a lot of catching up to do,” says an industry observer.
Source : The Edge
Olympia Industries Bhd and Kretam Holdings Bhd — announced that their standalone stockbroking units had received the Securities Commission’s (SC) nod to undertake activities accorded to a 1+1 stockbroking company.
They were given the 1+1 status, which allows them to open branches, provide electronic access facilities and undertake structured products offerings, without having to conduct a merger with another player.
According to both companies’ announcements, the approvals given to Jupiter Securities Sdn Bhd and Innosabah Securities Bhd, owned by Olympia and Kretam respectively, were provided under the Alternative Mechanism to Fulfilling the Consolidation Requirement Under the Policy Framework for Stockbroking Industry Consolidation.
In a reply to queries by The Edge Financial Daily recently, a SC spokesperson said the “alternative mechanism” represented the conclusion to the Consolidation Policy that was initiated in April 2000.
Standalone brokers can now get 1+1 status with access to more revenue-generating ops.
While the alternative mechanism is not a new policy, this is the first time that the SC has actually utilised the mechanism to give a lift-up to standalone stockbroking firms, which had failed to undertake a 1+1 merger as per the SC’s initiatives 10 years ago and thus had been left out of the opportunities to expand their business via opening more branches.
“This will effectively enhance the value of these stockbroking companies, as they now have access to more revenue-generating operations without having to pay premium in acquiring another standalone stockbroking company,” an industry observer said, adding that some of these standalone stockbrokers now stand a better chance of attracting suitors from abroad.
The alternative mechanism was seen as a second chance for standalone broking firms. Currently, only six standalone stockbroking companies remain in the country. They are BIMB Securities Sdn Bhd, FA Securities Sdn Bhd, Innosabah, Jupiter Securities, Malacca Securities Sdn Bhd and SJ Securities Sdn Bhd.
Some of these firms had attempted mergers previously. In 2001, Jupiter Securities was in talks to acquire Innosabah to tap into the Sabah equities market. However, the agreement lapsed in 2002.
There are 26 non-bank backed “capital market intermediaries” currently. These comprise one universal broker (PM Securities), six 1+1 brokers (including TA Securities, Interpacific Securities and Apex Securities), six standalone investment banks (including OSK Investment Bank and Kenanga Investment Bank), seven foreign stockbroking outfits (such as CLSA, UBS and JP Morgan), and six standalone brokers.
However, there are certain criteria that standalone brokers would have to meet for the 1+1 status to be accorded.
The SC spokesperson said the alternative mechanism required standalone stockbroking companies to commit investments to strengthen their operational framework and to contribute to an industry development fund. The regulator, however, was mum on the amount of funds that these brokerage outfits are required to commit.
The brokers are required to allocate a budget to enhance the current front office system by investing in a new order management system within three years of the development plan. This is to strengthen these firms’ operation framework and promote investment in the stock market.
The SC would only formally recognise their 1+1 status when all the conditions are met.
Standalone brokers were required to have a minimum paid-up capital of RM20 million and shareholders’ funds of RM20 million. Nonetheless, their expansion was capped as they were not allowed to open branches or offer other products and services apart from broking activities.
Since 2000, some of the stockbroking companies such as OSK and Kenanga had moved on to become full-fledged investment banks, which require an even higher minimum paid-up capital of RM500 million. Fast track into 2011, firms like OSK not only have operations in Malaysia but is known as a regional financial services firm with branches in Singapore, Hong Kong and Indonesia.
“No doubt standalone brokers had avoided paying a steep premium for the 1+1 status. But as they were unable to expand over the last 10 years, they have lost a lot of business opportunities to their old rivals, which have grown much bigger. They will have a lot of catching up to do,” says an industry observer.
Source : The Edge
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