ASEAN KEY DESTINATIONS
Malaysia relaxes on takeovers
Acquisitions of Malaysian companies almost tripled so far this year compared with all of 2009 to $21.3 billion, the highest in three years, according to data compiled by Bloomberg. In November alone, Malaysian real estate developers announced three mergers worth almost a combined $3 billion.
"This is a year of M&A for Malaysia," said Chay Wai Leong, managing director of Kuala Lumpur-based RHB Investment Bank Bhd., the top-ranked adviser on takeovers of Malaysian companies this year, according to Bloomberg data. "The sentiment is good and there is a recognition of the need for scale."
The deal rebound came after Prime Minister Najib Razak last year eased rules governing takeovers, initial public offerings and property purchases as Malaysia faced its first economic contraction in a decade. Najib, 57, is pushing for consolidation after finding during a 2009 trip to New York that the relatively small size of Malaysian companies deterred U.S. investors. Malaysian mergers have outpaced investment in the Asia- Pacific region, where the $435 billion of deals announced in 2010 marks a 7 percent gain from last year.
Domestic consolidation has powered Malaysian deals this year, with mergers between local companies accounting for about three-quarters of total acquisitions, Bloomberg data show. The country's main stock index closed at a record 1528.01 on Nov. 10, and has since lost 0.9 percent.
Even after the FTSE Bursa Malaysia KLCI Index rose 17 percent this year, the average company on the gauge has a market value of $4.9 billion, data compiled by Bloomberg show. That's 60 percent smaller than in neighboring Singapore and 57 percent below counterparts in India. All three countries' benchmarks include 30 stocks.
Malaysia attracted 5.1 billion ringgit of foreign direct investment in the first quarter of this year, almost matching the total for 2009, International Trade & Investment Minister Mustapa Mohamed said in July. The government forecasts economic growth of up to 7 percent in 2010, the fastest pace in a decade.
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