Construction counters on a roll
PETALING JAYA: Construction stocks, led by way of IJM Corp Bhd and Gamuda Bhd , rallied the day gone by on excessive hopes that several huge infrastructure development initiatives, presently placed on keep, could be revived soon.
Rakuten Trade Research said sentiment on the sector has grew to become tremendous, driven by way of information flows regarding the East Coast Rail Link (ECRL) and upcoming projects in Penang.
“Sentiment is becoming greater upbeat at the ECRL, that’s tagged at a big RM35bil to RM40bil, as the project is touted to be showed every time quickly.
“Meanwhile, the Penang light rail transit and the Pan Island Link 1 will really shed light on the cutting-edge government’s willingness to roll out projects to reinforce the nation’s economic sports.
“This additionally reinforces our robust stance on the construction sector, which have to be the star performer this yr,” it stated in a report the day before today.
It is well worth noting that many construction shares have rallied on the grounds that the start of the 12 months, as investors have positioned themselves at the roll out of mega-infrastructure initiatives.
IJM Corp rose five.5% to RM2.30, while Gamuda accelerated 4.8% to RM3.25 a proportion. On a 12 months-to-date basis, both stocks have risen extra than forty one%, as communicate of the ECRL assignment’s revival has been ongoing for the past couple of months.
Building material counter Ann Joo Resources Bhd , in the meantime, closed 8% higher to RM1.Seventy six while Lafarge Malaysia Bhd fell 4.6% to RM2.Forty nine the previous day.
Lafarge had in advance won contracts under the ECRL venture earlier than it changed into suspended. The ECRL venture earlier had carried a fee tag of RM55bil as announced in 2016 earlier than ballooning to RM81bil as disclosed after the new authorities stepped in remaining year.
The FBM KLCI closed better the day before today aided by means of telco and plantation counters. The index ended 2.Fifty four factors or 0.15% better to at least one,644.35, with 500 gainers, 386 losers and 383 counters remaining unchanged.
Regional markets have been mixed, with the Shanghai Composite Index shedding 0.05%, CSI 300 losing zero.12%, Japan’s Nikkei 225 ending zero.21% lower and Singapore’s STI slipping zero.22%.
Hong Kong shares rose zero.Forty seven% and South Korea’s KOSPI ended the day flat.
On the ECRL, the construction of the 688-km lengthy rail hyperlink changed into suspended final July after the brand new government located irregularities inside the phrases of the “lopsided” contract would cost among RM34.4bil and RM41.3bil.
The continuation of the project is expected to be ironed out by way of Prime Minister Tun Dr Mahathir Mohamad, who is scheduled to go to China from April 24 to twenty-eight at the invitation of Chinese premier Xi Jinping to attend the second Belt and Road Initiative summit.
The rail link, if constructed, will join Port Klang in Selangor with Pengkalan Kubor in Kelantan, and will be built in stages.
Finance Minister Lim Guan Eng had earlier hinted that the ECRL challenge may be rerouted to Negri Sembilan. He had said that the undertaking could be continued if negotiations at the project led with the aid of the chairman of the Council of Eminent Persons, Tun Daim Zainuddin, could reduce the fee of its construction in addition.
It has been stated that the smaller-scale ECRL challenge would also see dedication by means of the Chinese authorities to buy Malaysian palm oil and produce in tasks.
The ECRL assignment started off with an initial estimate of much less than RM30bil in 2007. When the previous government signed the settlement with the primary contractor, China Communications Construction Co Ltd (CCCC), in 2016, it was for only Phase 1 – from Gombak to Wakaf Baru in Kelantan – tagged at RM46bil. The value of Phase 2, from Gombak to Port Klang, become any other RM9bil.
On May 13, 2017, the preceding government signed an extra agreement with CCCC to perform Phase 2 of the mission.
According to these figures, the fundamental price of the undertaking amounted to approximately RM66.78bil. However, it did not encompass the land acquisition price, interest, expenses and operating fees – which introduced the final amount of the ECRL to a awesome RM81bil.