Malaysian-listed F&B company, Berjaya Food Berhad (“BFood”)’s share price suffered a massive one-day drop of 15.33% to a low of RM1.27 per share today.
The massive drop in the share price of BFood may be possibly due to on-going disposal of stakes by Norway’s Norges Bank. Norges Bank / Noregs Bank is the central bank of Norway. Apart from having traditional central bank responsibilities such as financial stability and price stability, it manages The Government Pension Fund of Norway, a stabilization fund that may be the world’s largest sovereign wealth fund.
As per recent company announcements, the on-going disposals by Norges are as follows:
Norges came in as substantial shareholder for BFood on 22 April 2016. For more info – Read more
Norwegian fund Norges has allotted RM800mil more to invest in small to mid-cap stocks in Malaysia. A market source said the foreign fund appointed Eastspring Investments Bhd and was investing in general equity, with a preference for the small to mid-cap equity space.“There are no specific guidelines as to which sector Norges is keen on. It wants to look at good companies and it so happens the local small and mid-cap space is doing well this year,” the source said. Norges has been one of the largest foreign fund investor in Malaysian equities since 2010. Read more
The on-going disposals of BFood by Norges may be attributable to its recent developments in relation to its overall global investment strategy:
The world’s biggest sovereign wealth fund, long a backstop for global equity markets, is looking into potentially trimming its $520 billion (Dh1.9 trillion) stock portfolio as it tries to buy more properties and even move into infrastructure.
Faced with withdrawals from the government and dwindling returns amid record low interest rates, the investor has so far been selling “lower yielding” bonds to fund real estate purchases. That could soon include selling stocks as well as the government gives the green light to increasing the share of so-called real assets.
The fund is working on a “new model” where funding of real estate “will be out of both bonds and equities,” Deputy Chief Executive Officer Trond Grande said in an interview on Wednesday in Oslo. The plan will be presented to the Finance Ministry in early October, which will then decide, he said.
As BFood is considered as a mid cap stock, it may also have been affected by prevailing investors’ sentiment that has been turning shaky as displayed by yesterday’s decline in most small-to-mid cap stocks – Read more
*Updated – it may be possibly due to this, snapshot from The Edge Weekly
Is there a bottom to the drop?
Volatility of BFood’s share price will continue to remain high. Nevertheless, we may see a potential bottom to the price drop due to the following compensating factors:
1 – Company has been initiating share buybacks
2 – Higher target price by analysts
3. Technical indicator such as RSI seems to suggest “oversold” position
4. Potential fundamental upside as highlighted in an earlier post: Read more
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