KL palm oil stocks soar on rally and RI ban
KL palm oil stocks soar on rally and RI ban
KUALA LUMPUR (AFP): Listed plantation companies in Malaysia are experiencing a windfall in share prices due to a rally on the local bourse and Indonesia's plan to ban export of palm oil, analysts said yesterday.
Plantation firms on the Kuala Lumpur Stock Exchange (KLSE) dealing in palm oil have seen price hikes of up to 20 percent in the last two weeks amid the bourse's bullishness and Jakarta's proposal Tuesday to outlaw external sales of palm oil.
"The overall market rise has pushed up most commodity counters while the Indonesian plan could have factored particularly into palm oil stocks," said Tan Teng Boo, managing director of Capital Dynamics, a Malaysian-based investment consulting firm.
The KLSE benchmark composite index, spurred by a return of foreign funds and strong earnings by listed firms, has jumped 47.29 points, or nearly five percent in value, since July 28 to close 1,073.59 on Wednesday.
While the surge only indicated gains by the 86 stocks weighted on the index, brokers said certain commodity counters outside the index had been posting handsome profits for punters.
Among the best bets in the last week were palm oil company Sungei Bagan, which climbed 11.50 ringgit (US$4.6), and Negri Sembilan Oil Palms, which perked 1.50 ringgit, since August 3, to close at 82 ringgit and 8.90 ringgit, respectively, on Wednesday.
Jeram Kuantan, Malaysia's most expensive stock, was another palm oil-based winner, surging 15 ringgit over the week to 130 ringgit.
"Although some rubber, coffee and tin-based counters are facing erratic movements, palm oil stocks have been doing well, helped partly by better prices for the commodity and the Indonesian move," said a broker.
Indonesia
Indonesia's logistics bureau said Tuesday the proposed ban on palm oil exports was necessary to arrest soaring domestic prices of cooking oil which had reached Rp 1,500 (72 U.S. cents) a kilogram from Rp 1,220 in December.
The bureau also proposed a tax scheme to curb palm oil sales from Indonesia, the world's second largest palm oil producer with a projected 3.89 million-tons export this year compared to the 7.5 million tons expected from Malaysia, the largest producer.
"Malaysia is already enjoying a nice slice of the global palm oil cake, with China, Pakistan and India having cut back on production and things could be more bullish if Indonesia proceeds with the ban," said an analyst.
Price of Malaysian palm oil has risen to its highest level in six years, with the commodity now fetching an average of 1,410 ringgit per ton against 1,260 ringgit in 1988, due to lower output of edible oils worldwide.