Khazanah kudos!

• Malaysia’s sovereign wealth fund buys 8.8% stake in premier blue chip JKH for an estimated US$ 120 m from EPF
• Market turnover rockets to four-year high

Khazanah Nasional Berhad, Malaysia’s State investment arm, yesterday bought an 8.8% stake in John Keells Holdings (JKH) from the Employees Provident Fund (EPF) in a deal that was aimed at boosting foreign inflows to the troubled bourse.   

The fund bought 74 million shares in 29 blocks for around US$ 120 million. “This is a reputed and prestigious investor and it is a positive development to have a reputed and stable long-term investor,” John Keells Holdings Executive Vice President Krishan Balendra told FT, adding that it was a positive development for John Keells and the Colombo stock market.
Approximately 516 million shares of John Keells Holdings changed hands and the share closed 30 cents lower at Rs. 195.
Reuters reported that Central Bank Governor Ajith Nivard Cabraal confirmed the bank had taken steps consistent with its efforts to boost foreign investment in the country’s share market, but declined to give details.
The Central Bank has targeted a US$ 500 million net inflow into the share market this year, after outflows of US$ 168 million in 2011 and US$ 240 million the year before. Foreign buyers had invested a net US$ 25.7 million so far this year before the Keells sale.
The trade took the struggling bourse to its highest level since 1 April 2008 and set a positive tone for the coming week even though the rupee ended the day at an all time low.
However, foreign investors still see the market as overheated, and have also been discouraged from investing by lack of liquidity, insider trading and market manipulation, mainly driven by local retail investors, analysts said.
Khazanah Nasional is Malaysia’s sovereign wealth fund similar to Singapore’s Temasek. Recently Malaysia’s second largest financial services firm CIMB Group, in which Khazanah has a 30% stake, entered into a strategic collaboration with John Keells Stock Brokers. Many had viewed this as a forerunner to greater Malaysia interest even though the two are separate entities.