KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
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| 1MDB near to $2.3 billion |
1 Malaysia Development Bhd, which has been embroiled in much controversy for the high debt that it has accumulated is closing on an agreement to sell control of its power business to Chinese-led bidding group as part of its plan to wind down its' operations.
An agreement with the consortium, which includes China General Nuclear Power Corp. and Qatar's Nebras Power QSC is coming to a near conclusion. The deal is said to have the 1MDB's Edra Global Energy Bhd. unit at about 10 billion ringgit ($2.3 billion), trumping a rival offer from Malaysian energy producer Tenaga Nasional Bhd.
With so much controversy surrounding the 1 Malaysia Development Bhd, the impending rising rate by the US Fed and the unconvincing economical data coming out from China, the Malaysian Ringgit has suffered an 18% drop this year, making it as the worst performing currency in Asia. This has been beneficial to the foreign bidders to buy the 1MDB power plants. Tenaga, a Kuala Lumpur-listed utility controlled by the nation's sovereign fund, is wary of overpaying because it needs to justify any acquisition to shareholders. This is to avoid to be seen as a bail out as there are so many news and controversies surrounding 1MDB.
“This deal would be very significant towards improving the sentiments towards Malaysia,” Danny Wong Teck Meng, chief executive officer of Kuala Lumpur-based Areca Capital Sdn., which manages about $224 million in assets, said by phone Friday. “If this deal gets finalized by the year-end, it will remove one big problem clouding the country.”
Foreign investors are normally only allowed to own as much as 49 percent of Malaysian power producers unless they obtain a waiver, as the government provides gas to electricity plants at subsidized prices.
1MDB, which almost defaulted earlier this year, expects 16 billion ringgit to 18 billion ringgit for the power plants and has received bids close to that figure, company president Arul Kanda said Oct. 31. The sale is part of 1MDB’s plan to dismantle its operations after it drew criticism from lawmakers for increasing debts that totaled 41.9 billion ringgit as of March 2014.
1MDB owns a net generation capacity of 5,594 megawatts and is the largest independent
power producer in Bangladesh and Egypt, according to its website. Besides investments in plants in Pakistan and the United Arab Emirates, it has 3,112 megawatts of capacity in Malaysia, making it the nation’s biggest independent power producer after Malakoff Corp.
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