Wednesday, August 27, 2008

EPF a Contrarian Like Us?

Stumbled upon this article in the Edge Weekly written by Kathy Fong. It was titled "EPF ups stakes in plantation companies".

According to Kathy, the EPF appears to be contrarian in terms of stock picking on Bursa Malaysia lately. Although many probably think that buying plantation stocks, which are currently undergoing a sharp correction, is a little like catching a falling knife. The EPF, however, is pouring money into plantation counters. The recent decline in CPO prices does not seem to worry it.

Sounds like what HDFIV is doing? The recent decline in CPO prices does not worry us too. In the article itself, the managing director Gerald Amrbose from Aberdeen Asset Management Snd Bhd also made a comment that is very in line with HDFIV's strategy. He said "Over the long term, we've made the point that the supply of edible oil will be limited because of scarcity of agriculture land. If it becomes alternative fuel, we are not just eating it but also burning it. But it is just that there are little bubbles resulting in some uncertainties in the shor term."

However, as a fund management company, Aberdeen Asset Management have shorter term investment horizon and concerned about possible excess supply when th eworld economy slows down, the rising fertiliser costs that eat into planters' margin and changes in policy on biofuel in some European countries amid inflation worries.

Majority of research houses in Malaysia have downgraded the plantation sectors and stocks under coverage. Again, not a concern to us because I can guarantee the houses will upgrade them when CPO goes up.

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