Felda Investment buys 49.45% stake in Encorp in RM239.72mil deals

PETALING JAYA: Felda Investment Corp (FIC), the investment arm of the Federal Land Development Authority (Felda), has bought out all the shares in Encorp Bhd held by two major shareholders for RM239.72mil.

The move, said observers, could make Encorp the listed property development vehicle of the Felda group, which owns large swathes of valuable landbank in major cities across Malaysia.
According to a Bursa Malaysia filing yesterday, FIC had acquired 49.45% of Encorp from Lavista Sdn Bhd and Pegang Impian Holdings Sdn Bhd via separate conditional sale and purchase agreements.

This will oblige FIC to extend a mandatory takeover offer for the shares, warrants and loan stocks that it does not own in Encorp at RM1.55, 55 sen and RM1.55 apiece, respectively.

Lavista is to dispose of its 29.85% stake, as well as 8.33 million five-year warrants and 16.66 million five-year 6% redeemable convertible secured loan stocks (RCSLS) with a nominal value of RM1 each to FIC for RM133.69mil cash.

World economy on track for modest recovery, inflation to remain well contained

Schroders Economic & Strategy Viewpoint says the world economy is on track for modest recovery as monetary stimulus feeds through and fiscal headwinds fade in 2014. Nonetheless, it is not good news for the rest of the world particularly those economies which have relied on selling to the US, it says. It says the US economy still faces fiscal headwind, but gradually normalising as banks return to health and private sector de-leverages. The Federal Reserve is expected to complete tapering of asset purchases by October 2014, possibly earlier, with the first rate rise expected in the third quarter of 2015.

“The emerging markets are vulnerable in this respect and it is notable that the surplus in these economies has declined significantly from 5% to 1% of gross domestic value (GDP) since the crisis according to figures from the IMF,” it says. Schroders notes that much of the improvement in US trade has been with the fragile five of Brazil, India, Turkey, Indonesia and South Africa. “These economies are now adjusting, but this analysis suggests that there will be no return to pre-2007 export growth,” it says. It adds that tighter monetary policy also weighs on emerging economies. It says that China’s growth is downshifting as past tailwinds on strong external demand, weak US dollar and falling global rates going into reverse. “The authorities seek to de-leverage the economy,” it says.
The Chinese GDP growth slowed in the first quarter of 2014, from 7.7% at the end of last year to 7.4%, year on year. “Though this was better than expected – City expectations had been for a rate of 7.3% - the economy is still slowing and we think hopes for greater stimulus will be dashed.

“Meanwhile, higher frequency data for March, combined to give a leading indicator, generally points to continued softness in the second quarter,” it says. Combined with the weaker PMI seen at the month’s start and softer money supply numbers, Schroders opines that it is difficult to feel positive about Chinese growth, despite the better than expected GDP number. Pulling this together the conclusion is that the US is likely to be less of a locomotive for global growth than it has been in previous cycles, it says. “Consumer spending is likely to be more lacklustre and, of the demand generated by the US, more is likely to be met by domestic rather than overseas production,” Schroders adds.

Malaysian Islamic capital market now worth RM1.5 trillion

KUALA LUMPUR: The Malaysian Islamic capital market (ICM) which grew by 8.8% in 2013 is now worth RM1.5 trillion.

ICM now accounts for 56% of the overall Malaysian capital market, said the Securities Commission deputy chief executive Datuk Dr Nik Ramlah Mahmood.

“Seventy-one per cent of our public listed companies are designated as syariah-compliant. We also maintained our position as the largest sukuk issuer in the world, accounting for 69% of the global sukuk issuance,” she said at the BNP Paribas - INCEIF Centre for Islamic Wealth Management Symposium here yesterday.

“She said better wealth creation and investment opportunities for investors had also been made available by increasing the number of full-fledged Islamic fund management companies in Malaysia.

“Our Islamic fund management industry with RM97.5bil in assets under management, is managed by 19 asset management companies licensed to exclusively manage syariah-compliant funds.
“Of the total assets under management, RM42bil is in the form of syariah-compliant unit trust funds which grew by 21% in 2013,” said Nik Ramlah.

“Of particular relevance to the Islamic wealth management industry is the fact that Malaysia now has 52 Islamic wholesale funds with almost 15 billion units in circulation with a total net asset value (NAV) of RM16.43bil.
 
“This represents almost 28% of the NAV of all wholesale funds in Malaysia. While it is clear that the local ICM has supported domestic growth by offering a multitude of financing and investment opportunities to domestic businesses and investors, it also continues to leverage on Malaysia’s core strengths to make very significant strides in the international arena and is now increasingly more integrated with the international market,” she added.

According to Nik Ramlah, a milestone was achieved in this regard with the introduction of the revised screening methodology of listed stocks.

“The two-tier quantitative approach introduced in 2013 further aligns our screening process with international practices, thus paving the way for a greater inflow of foreign Islamic funds into the domestic markets,” she said. — Bernama

 “By also incorporating a two-tier quantitative benchmark approach comprising business activity and financial ratio benchmarks, the adoption of the revised methodology is envisaged to further enhance the attractiveness of the Malaysian Islamic equity market and fund management segments to international investors.

“With this in place, the wealth management industry should gain more traction with a wider market, especially from investors looking for syariah-compliant wealth management solutions,” she said.
The symposium, jointly organised with the Labuan International Business and Financial Centre, attracted more than 150 delegates.

A total of six speakers and panelists, ranging from regulators, Islamic scholars, academicians and industry practitioners, convened to share their insights and knowledge of the Islamic wealth management industry.

During the one-day symposium, speakers and delegates deliberated on practical issues and challenges in further developing the Islamic wealth management industry and its relevant management structures such as the Labuan Islamic Trusts and Foundations, to gain a competitive advantage in establishing Malaysia as a preferred Islamic wealth management destination.

At the end of the symposium, Chairman of BNP Paribas - INCEIF Centre for Islamic Wealth Management (CIWM) Advisory Board Professor Datuk Dr Syed Othman Alhabshi, said more awareness programmes need to be created, especially for high net worth individuals and financial wealth managers to promote Islamic wealth management in Malaysia.

Labuan IBFC chief executive officer Saiful Bahari Baharom said Malaysia had the infrastructure and expertise in the Islamic finance space to develop a strong competitive value proposition in syariah-compliant wealth management.

“The Islamic wealth management value chain is long, starting with the acquisition of assets, advisory and management services, in addition to legal, taxation and syariah advice, alongside trust and custodial services. Right at the end is the distribution of the assets.

“Each of these parts contributes to a specific value-added competency that we must strive to enhance to help grow our domestic high-value wealth management industry,” he added. -- Bernama