Edra: Ringgit rebounded

Based on the model of exchange rates, the ringgit should hover at RM3.70 against the US dollar (US) without negative sentiment was affected mainly the issue of 1Malaysia Development Berhad (1MDB) since August.

According to MIDF Research, many believe that the ringgit will be recovered in the event of negative sentiment has subsided, supported by the global economy and financial markets are beginning to stabilize.

On this evening, the ringgit rebounded when it closed at RM4.2420 from RM4.3010 yesterday, after 1MDB agreed to sell energy assets Edra Global Energy Bhd. (Edra) to the General Nuclear Power Corporation (CGN Group) amounted to RM9.83 billion, in addition to the recovery of global crude oil prices.

"It is recognized in the financial market, the ringgit was under pressure due to negative sentiment, especially since a hot issue 1MDB around August. But the question is, what are the conditions necessary to look back retroactively applicable sentiment?

"However, the achievements earned it fair 1MDB scrutinized, whether financial markets will define it as a 'solve' the problem and help to reduce the negative sentiment in the market," he said in a brief statement on the economy yesterday.

CGN Group signed a Share Sale and Purchase Agreement (SSPA) with 1MDB to acquire a 100 percent stake in Solar Edra Sdn. Bhd., Edra Energy Sdn. Bhd., Powertek Energy Sdn. Bhd., Jimah Teknik Sdn. Bhd., Jimah O & M Sdn. Bhd., Mastika Lagenda Sdn. Bhd. and Tiara Land Sdn. Bhd.
President and Group Executive Director 1MDB, Arul Moto described the purchase by CGN Group takes a commitment of foreign direct investment (FDI) into the country and reflects their confidence in the Malaysian economy.

Meanwhile, HLIB Research analyst Daniel Wong said in a research note, there is some concern whether CGN Group is allowed to own 100 per cent of energy assets in Malaysia or the company needs to reduce its stake to local partners in the future.

He said the admission CGN Group in the energy sector of the country only control 3,640 gigawatt (GW) or 15.6 percent of power capacity in Peninsular Malaysia, with the majority still controlled by Tenaga Nasional Berhad (54.9 percent) and Malakoff (21.3 percent).

"But, CGN Group energy assets subject to the terms and conditions of the power purchase agreement (PPA) is tight, to protect the interests of both parties (CGN Group and BNP). So, not sure whether CGN Group allowed to own 100 per cent of the country's energy assets, "he said.

He said, in terms of benefits to the country as well, CGN Group has expertise in nuclear energy, which allows Malaysia to venture into the sector in the future.

"We believe this news (Edra asset sales) would provide relief to the park after the share price under pressure due to concerns about TNB had to pay more and expect the stock price will respond positively," he said.

source : Utusan Malaysia