Carnage

Malaysian-listed F&B company, Berjaya Food Berhad (“BFood”)’s share price suffered a massive one-day drop of 15.33% to a low of RM1.27 per share today.

BFood_19082016

The massive drop in the share price of BFood may be possibly due to on-going disposal of stakes by Norway’s Norges Bank. Norges Bank / Noregs Bank is the central bank of Norway. Apart from having traditional central bank responsibilities such as financial stability and price stability, it manages The Government Pension Fund of Norway, a stabilization fund that may be the world’s largest sovereign wealth fund.

As per recent company announcements, the on-going disposals by Norges are as follows:

SHF_Bfood.png

Norges came in as substantial shareholder for BFood on 22 April 2016. For more info – Read more

Norwegian fund Norges has allotted RM800mil more to invest in small to mid-cap stocks in Malaysia. A market source said the foreign fund appointed Eastspring Investments Bhd and was investing in general equity, with a preference for the small to mid-cap equity space.“There are no specific guidelines as to which sector Norges is keen on. It wants to look at good companies and it so happens the local small and mid-cap space is doing well this year,” the source said. Norges has been one of the largest foreign fund investor in Malaysian equities since 2010. Read more

The on-going disposals of BFood by Norges may be attributable to its recent developments in relation to its overall global investment strategy:

The world’s biggest sovereign wealth fund, long a backstop for global equity markets, is looking into potentially trimming its $520 billion (Dh1.9 trillion) stock portfolio as it tries to buy more properties and even move into infrastructure.

Faced with withdrawals from the government and dwindling returns amid record low interest rates, the investor has so far been selling “lower yielding” bonds to fund real estate purchases. That could soon include selling stocks as well as the government gives the green light to increasing the share of so-called real assets.

The fund is working on a “new model” where funding of real estate “will be out of both bonds and equities,” Deputy Chief Executive Officer Trond Grande said in an interview on Wednesday in Oslo. The plan will be presented to the Finance Ministry in early October, which will then decide, he said.

Source: Read more

As BFood is considered as a mid cap stock, it may also have been affected by prevailing investors’ sentiment that has been turning shaky as displayed by yesterday’s decline in most small-to-mid cap stocks – Read more

*Updated – it may be possibly due to this, snapshot from The Edge Weekly


Is there a bottom to the drop?

Volatility of BFood’s share price will continue to remain high. Nevertheless, we may see a potential bottom to the price drop due to the following compensating factors:

1 – Company has been initiating share buybacks

Buyback.png

2 – Higher target price by analysts

Bfood_PriceTarget.png

3. Technical indicator such as RSI seems to suggest “oversold” position

4. Potential fundamental upside as highlighted in an earlier post: Read more

DISCLAIMER: ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES OR INSTRUMENTS MENTIONED ABOVE.

Author: Ken Utau

Markets Observer + Food Lover

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s