KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Sino-Ocean Group Holding Ltd, a state-linked Chinese developer, is set to defend itself against a liquidation petition in a Hong Kong court on Wednesday, amid ongoing tensions with a group of bondholders over its restructuring plans. Once considered one of China's stronger developers, Sino-Ocean is now under significant pressure to demonstrate progress in its restructuring efforts to avoid potential liquidation.
Key Takeaways:
Restructuring Efforts and Bondholder Tensions: Sino-Ocean is facing increasing tensions with a key group of bondholders, who have filed a liquidation petition due to the non-repayment of a 3.25% dollar bond due in 2026. The company announced that over 75% of creditors holding loan facilities have agreed to its July restructuring proposal, which involves converting approximately $5.6 billion of debt into $2.2 billion of new debt, with remaining claims exchanged into mandatory convertible bonds or perpetual securities. However, the company has not disclosed the level of support among bondholders, who remain divided on the proposed terms.
Counterproposal from Bondholders: The bondholders submitted a counterproposal last month that includes a cash payment option, a smaller haircut, and a higher interest rate than Sino-Ocean's original restructuring plan. However, Sino-Ocean considers these revisions to be beyond its financial capabilities, making their adoption unlikely. This standoff raises the stakes for Sino-Ocean as it enters the court hearing, with liquidation a possible outcome if a resolution with creditors is not reached.
Financial Pressures Amid Property Slump: Sino-Ocean’s financial situation is further strained by China's ongoing property slump, with contracted sales plunging by 47.3% in the first seven months of the year compared to the previous year. As of June 2024, the company had total cash resources of 4.7 billion yuan ($663 million). Despite having several hundred projects in China, the developer is struggling to generate sufficient sales and revenue.
With major state-owned entities like China Life Insurance Co holding significant stakes in Sino-Ocean, the case will be closely watched as an indicator of how China’s property sector navigates its current crisis, especially amid increased scrutiny of state-backed developers.
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