Tuesday, June 30, 2015

IPIC's interests

It is interesting to see in the announcement that was made by IPIC on the London Stock Exchange.

We know that IPIC is part of the Aabar group which owns a portion of RHB Capital. The Chairman of IPIC is also the owner of Manchester City which as we know can just pay very high price for players to get its club into winning.

What is interesting is the below which was announced in the London Stock Exchange.

Click to Enlarge
If we read it properly, these parties - 1MDB, MOF, IPIC, Aabar signed a binding term sheet. IPIC will provide for USD1 billion, assume USD3.5 billion in principal amount of notes as well as assume all liabilities under the Notes which they are due.

In return (interestingly), as mentioned by 30 June 2016 (a year from now), IPIC is to receive transfer of assets amounting to the total of USD1 billion + USD3.5 billion and the outstanding debt forgiveness. That would amount to around USD4.8 billion?

What I am interested in is which assets that Aabar or IPIC would be interested in? The power assets? From below, IPIC was formed to invest into energy and related sectors. We know that 1MDB has 3 assets which are valuable - Tun Razak Exchange, Bandar Malaysia and the power assets, Edra Energy. But from the 3, the power assets probably meet the criteria of its investments closer. If that is the case, IPIC may become one of the largest independent power company in Malaysia. But would the power assets be worth RM18 billion? Or could it be any other assets as in the announcement it just merely says assets.

Monday, June 22, 2015

Chinese Bubble

The article on Chinese stock market which made $6 trillion in just 12 months reminds me of 1993 and 1997 in Malaysia. KLCI back then peaked at around 1300 points and of course Second Board stocks in 1996 and 1997 was at prices that were ridiculous. If one were to put their money in some of the stocks, they will not have gotten their principal money back.

Malaysian market between end of 1993 until today
Of course, for the Malaysian stocks (Bursa CI) to manage to get back to 1300 points, it took another 10 years and I can imagine that financial performance of the Top 30 stocks today are much better than those days.

There is no doubt that we will see a crash in Chinese stocks - by how much only and when. Will it impact Malaysian market - I think it may cause a ripple. Economically, will China face a downfall - that is hard to say, but things certainly do not seem good.

Shanghai Stock Exchange for last 5 years