14 theSun | MONDAY JULY 6 2009

business

Too costly for govt to take

over toll roads: Analysts
KUALA LUMPUR: The
government is unlikely to opt
for the nationalisation of the
country’s toll operators as the
cost would be too big for the
government to bear amidst
the current weak economic
climate, analysts say.
They say it would not be
feasible for the government to
buy over toll operators
It is very as financial resources
costly ... and are needed more to-
wards revitalising the
the move will economy.
“It is very costly...
put a heavy and the move will
strain on the put a heavy strain
on the government’s
government’s budget at a time where
budget at a competition for funds
is high due to the
time where economic crisis,” said
competition Jupiter Securities head
of research Pong Teng
for funds is Siew.
high due to “Nationalisation of
toll operators would
the economic not just be costly but
more importantly
crisis.” would not have any
– Pong Teng Siew significant impact on
the economy, the busi-
ness environment as
well as the capital markets,”
he told Bernama.
Calls for the nationalisation
of toll highways came about
early this year particularly of
the North South Expressway
managed by PLUS Express-
ways Bhd.
DBS Vickers Research
recently stated that the gov-
ernment was most unlikely
to invoke an expropriation
clause in the toll concession
agreement to nationalise
PLUS Expressways as it could
involve shelling out a total of
RM30 billion for the exercise.
Another option is the pri-
vatisation route – assuming
the target price is RM3.80
per share and with PLUS
Expressways’ debt less cash,
the cost will work out to be
RM15.7 billion.
However, DBS Vickers
Research said the privatisa-
tion of PLUS Expressways
was also unlikely as it “will
likely anger East Malaysian
citizens who would not
benefit from it, coupled with
the fact that Barisan Nasional
(BN) component parties there
control 40% of the total BN
coalition.”
It also said that the priva-
tisation of Lingkaran Trans
Kota Holdings Bhd (Litrak)
– the concession holder of
Damansara-Puchong High-
way (LDP) – by the govern-
ment looked stronger as it
would cost approximately
RM1.3 billion to take the
company private compared to
PLUS Expressways’ RM15.7
billion.
Given that the focus was
on the two stimulus packages,
a bond issuance of RM15.7
billion would not be easily
absorbed, said the Singapore-
based research house.
As for the impact of na-
tionalisation on the corporate
bond market, analysts said
that nationalisation would
decrease the total outstanding
amount when toll operators
retire their bonds.
The opposite would hap-
pen to Malaysian Government
Securities (MGS) should the
government fund its buyout of
toll operators through MGS.
An analyst with a local
stockbroking firm who spoke
on condition of anonymity
said if the government decides
to nationalise toll highways,
one big issue would be the
recovery of its investment.
“The government would
not only be saddled with the
issue of toll rates but also how
it will maintain the highways
apart from recovering its
investments,” he said.
In terms of financing, he
said, the government was
already overstretched in
funding the nationalisation of
the country’s water assets.
The nationalisation of toll
highways that would require
massive funding would
increase the government’s
budget deficit and contrary
to its intention to reduce the
deficit.
The analysts interviewed
said the government may look
at other options like building
new highways or alternative
routes as a near to medium
term solution to the problem
of road congestion and toll
hikes. – Bernama

market summary JULY 3, 2009

Share prices expected to trade INDICES

FBMEMAS
CHANGE
7208.01 -13.86
rangebound this week COMPOSITE
INDUSTRIAL
1072.69
2375.51
-6.02
-13.43
SHARE prices on Bursa Malaysia 100,” said the research house. CONSUMER PROD 321.72 -1.86
INDUSTRIAL PROD 82.94 -0.66
are likely to see a rangebound trade Among the biggest beneficiaries will CONSTRUCTION 202.23 -3.71
next week with investors continuing be Genting, YTL Power and Parkson TRADING/SERVICE 143.29 0.16
to be cautious amid bearish market Holdings, which are in both the FBM FINANCE 8542.12 -46.00
sentiments. KLCI and FBM 100. PROPERTIES 697.44 -1.29
The adoption of the FTSE Bursa The top six on the FBM KLCI will be PLANTATION 5375.84 -31.78
Malaysia Kuala Lumpur Composite Index Bumiputra-Commerce, Public Bank, MINING 273.57 0.00
FBMSHA 7429.92 -17.13
(FBM KLCI) effective today from the Kuala Sime Darby, Maybank, Tenaga and IOI FBM2BRD 4725.07 35.32
Lumpur Composite Index (KLCI) is also Corporation, all of which will see their TECHNOLOGY 13.99 -0.17
expected to keep trade rangebound. weightage increase by two percentage
FBM KLCI is made up of the 30 larg- points or more. TURNOVER VALUE
est listed companies by market value, Meanwhile, a dealer said the KLCI 1.097bil RM983mil
with at least a 15% free float. will likely move between 1,040 and
Its constituents are prime market 1,090 this week. billion shares valued at RM5.389
movers and represent about 60-70% He said despite the announcement billion from 6.655 billion shares worth
of the main board’s market capitalisa- of further liberalisation in the capital RM6.932 billion the week before.
tion. market last Tuesday, it will take a while Volume on the Main Board declined
OSK Research Sdn Bhd, in its for the market participants to react to 4.421 billion shares valued at
research note said most fund manag- positively with the transition to the RM5.209 billion versus the previous
ers prefer to benchmark their fund new index. Friday’s close of 5.757 billion shares
against the FBM100 rather than the On Friday-to-Friday basis, the KLCI worth RM6.686 billion.
new FBM KLCI as the former more eased 3.08 points to close at 1,072.69 The Second Board’s volume eased
closely matched the old KLCI in terms compared with last week’s closing of to 304.794 million shares valued at
of diversity. 1,075.77. RM115.711 million from 475.424 million
Sixteen of the current 17 sectors are The Finance Index improved 18.95 shares valued at RM168.85 million the
represented in the FBM100 except for points to 8,542.12, the Plantation Index week before.
timber. declined 20.16 points to 5,375.84 while Turnover on the Mesdaq Market
“Given that most institutional the Industrial Index gained 28.94 points dropped to 144.723 million units worth
investors will be benchmarking to 2,375.51. RM24.697 million compared with
against the FBM100, we see the KLCI The FMBEmas slipped 3.45 points 280.855 million shares worth RM49.336
component stocks feeling far less to 7,208.01, the FBM2BRD lost 73.73 million previously.
impact come July 6. points to 4,725.07, the FBM30 gained Call warrants’ volume declined to
“There should be less selling 81.76 points to 6,987.67 and the 69.152 million worth RM12.177 million
pressure on the 70 KLCI stocks that did FBMMDQ dropped 140.66 points to from the previous week’s closing of
not make it to the FBM KLCI as 45 of 3,976.31. 111.811 million valued at RM16.843
these companies will still be in the FBM Weekly turnover dropped to 4.996 million. -- Bernama