Digest on Malaysian News

On Oct 20, 2008, Najib Razak, Deputy Prime Minister announced that the government will provide RM5 billion in additional funds to double the size of Valuecap Sdn Bhd to RM10 billion and to invest in undervalued stocks and protect investments in government-owned companies (or government linked companies - GLC).

First, the RM5 billion funds from the government is actually loaned from EPF (where your retirement savings and my retirement savings are kept). EPF has the cash and if those GLC stock are attractive then why not EPF make direct investment. Why have to lend the money to Valuecap so that Valuecap can invest in those GLC ? Maybe those GLC are sick and losing money and EPF knew that it is not going to be a profitable investment. However, lending RM5 billion to Valuecap would have government guarantee.

If those GLC are not making lost, why bother about buying their shares. After all, if they can sustain their business, they don't need capital injection. The only time there is a need for capital injection (or investment of fund) is when a company need cash for big expansion or need it badly for operating capital (e.g. a losing company running out of cash).

Some one from the Finance Ministry or Bank Negara or Khazanah Nasional should advice the Cabinet to close down those GLC companies that are no longer viable. Instead, Najib is like main saham and trying to keep a terminally ill company living.

So is RM5 billion duit rakyat a bailout package for sick GLC or a gambling token for Valuecap to make profit for those undervalue stock ? Or some cronies have big shares in those GLC and the moment money are throw in their counter, the share prices will shoot up and those cronies will cash out their shares and make more money. Or has some one has convience the government to manipulate the market price of those share to make a quick profit. Main saham ler tu.

About Valuecap Sdn Bhd

ValueCap Sdn Bhd is like an investment arm of Khazanah Nasional. Valuecap has no website so the following info was extracted from Khazanah Nasional website. Established in 2002, Valuecap is a fund management company which was created to invest specifically in the Malaysia equities market. Owned jointly by Khazanah, PNB and KWAP, Valuecap’s key mandate is to undertake investments in equities listed on Bursa Malaysia on a portfolio basis, based on superior fundamental investment research.

Further reading:
* Shock and awe of Barisan Nasional typical economy
* Is this RM5 billion for main saham really necesary?
* Why Big E? Why?

From Bernama

Government Provides RM5 Billion In Additional Funds To Invest In Undervalued Stocks

KUALA LUMPUR, Oct 20 (Bernama) -- The government will provide RM5 billion in additional funds to double the size of Valuecap Sdn Bhd to RM10 billion and to invest in undervalued stocks and protect investments in government-owned companies, Deputy Prime Minister Datuk Seri Najib Tun Razak said Monday.

The government set up Valuecap, in January 2003.

Speaking to reporters after opening the Khazanah Megatrends Forum, Najib said that the government will leave it to the Valuecap on how to distribute the fund.

"It is up for them to decide (distribute the fund). They will look at the position assets that are undervalued today," he said.

Najib, who is also Finance Minister, said the government will also liberalise the service sector in response to manage the global financial crisis.

He said the specific sector will be detailed out and this will be based on the International Trade and Industry Ministry's proposal to the Cabinet soon.

The government hopes through liberalisation, it can attract more investments and generate more employment within the country, he said.

He said the Foreign Investment Committee (FIC) guidelines will also be reviewed to make it more attractive for foreign investors particularly in the property and commercial sectors.

Under the liberalisation, Najib said some of the investments and purchases might not have to get FIC approval.

"These are the elements of the stabilisation plan and we will do it in stages."

"I'm talking about the financial stability as mentioned by Bank Negara on the guarantee (for bank deposits) to ensure there is no credit squeeze and lending continue to be high in Malaysia, particularly to small-and medium-sized enterprises (SMEs)," he said.

Najib said these measures would also ensure government expenditures will continue to be at the present level.

"We are mindful that we have to take steps to ensure long-term competitiveness while we manage the short-term crisis," he added.

-- BERNAMA
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From Bernama

Additional RM5 Bln Fund For Valuecap Is Sufficient, Says Nor Mohamed

KUALA LUMPUR, Oct 21 (Bernama) -- The additional RM5 billion fund to be provided by the government to double the size of Valuecap Sdn Bhd is sufficient, says Second Finance Minister Tan Sri Nor Mohamed Yakcop.

He said the amount was decent money to buy undervalued stocks.

Valuecap is a fund management company which was created to invest specifically in the Malaysian equity market and is jointly owned by Khazanah, PNB and Retirement Fund (Incorporated).

"The RM5 billion is reasonable sum which is an addition to RM5 billion that Valuecap already has," he told reporters on the sidelines of the Retirement Fund (Incorporated)'s Hari Raya open house here, Tuesday.

He said there will be no more additional funds provided by the government at the present.

Nor Mohamed also stressed that Malaysia will not be going into recession this year and next year as the country had resilient banking and financial systems.

He also said there was plenty of liquidity in the market and many companies had strong fundamentals and good earnings.

"We will not enter into recession in 2008. We don't believe that we will have recession in 2009," he stressed.

-- BERNAMA
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From TheStar

‘EPF will profit from loan to Valuecap’

KUALA LUMPUR: The Employees Provident Fund (EPF) will make a profit from the RM5bil that it will lend to the government investment agency, Valuecap Sdn Bhd, to support the local stock market, said Second Finance Minister Tan Sri Nor Mohamed Yakcop.

He said this was based on the past performance of Valuecap which has grown its portfolio from RM5bil initially to RM8bil now.

“I believe that they (Valuecap) will do well and EPF will certainly get its returns.

“Valuecap has done well. It has a good infrastructure, good staff who know better about the market and have a knowledge of what is happening (in the global market),” he told reporters after giving closing remarks at the Khazanah Megatrends Forum 2008, here yesterday.

He said this in response to Deputy Prime Minister Datuk Seri Najib Tun Razak’s press conference yesterday that the Government would borrow RM5bil from the EPF to double the size of Valuecap to RM10bil.

Established in 2003, Valuecap is a fund management firm created to invest specifically in the Malaysian equity market and is jointly owned by Khazanah, PNB and Retirement Fund (Incorporated). - Bernama

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