IJM and Genting excluded from investments wealth fund due to severe environmental damage

Environmental issues: IJM and Genting have interests in palm oil operations.

Norwegian fund to call off investments on environmental issue

PETALING JAYA: Norway’s US$871bil sovereign wealth fund Norges Bank has excluded IJM Corp Bhd and Genting Bhd from its investments due to risks of “severe environmental damage”.

Two other companies that the fund said it would not invest in are South Korean steelmaker POSCO and Daewoo International Corp, a trading company and listed subsidiary of POSCO.

“Norges Bank has decided to exclude the companies IJM Corp, Genting, POSCO and Daewoo International Corp from the investment universe of the Government Pension Fund Global.

“The companies are excluded based on an assessment of the risk of severe environmental damage,” it said in a statement. Both IJM Corp and Genting have interests in palm oil operations.

According to the fund’s website, it held US$46mil investments in IJM Corp and US$40.8mil in Genting.

The fund also has investments in IJM Land Bhd and Genting Malaysia Bhd.

The world’s top sovereign wealth fund has a range of ethics criteria for excluding firms from its portfolio, including environmental factors, nuclear weapons-making and labour conditions.

A handful of Malaysian companies are also on Norges Bank’s list of “exclusion of companies”, including WTK Holdings Bhd, Ta Ann Holdings Bhd, Lingui Development Bhd and Samling Global Ltd.

Norges has been one of the largest foreign fund investors in Malaysian equities since 2010. As at end-2014, the fund had invested about US$1.66bil in 139 Bursa Malaysia-listed companies. - Starbiz

Norwegian fund Norges allots RM800mil to invest in Malaysian small, mid-cap stocks

The foreign fund has invested about RM1.7bil in 53 Bursa Malaysia-listed companies.

PETALING JAYA: 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 about a month ago 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.

In April, StarBiz reported that the foreign fund had invested about RM1.7bil in 53 Bursa Malaysia-listed companies, managed by Kenanga Investors Bhd. At the time, the fund was already sitting on a paper gain of some RM600mil, with its entire holdings in Malaysia valued some RM2.3bil. Its performance in Malaysian equities was attributed to the big run-up in many of the small oil and gas companies since last year.

The source added that Norges was still looking for more fund managers to manage its investment in Malaysia. “It has always had this allocation for Malaysia which it had not entirely fulfilled yet. So it is continuously looking for fund managers,” the source said.

PublicInvest Research in its strategy note for the second half of 2014 said smaller-capitalised stocks in Malaysia have had a good run year-to-date, reflected by the FBM Small Cap Index’s 18.6% gain compared with the FBM KLCI’s 0.3% gain and FBM Mid 70 Index’s 1.2% rise.

Eastspring Investments had about US$105bil (RM334.2bil) in assets under management as at March 31.

The asset management house was named Asia’s leading retail fund manager for 2013 in an annual survey by Asia Asset Management.

Norges, also referred to as the Norwegian oil fund, has a market value of 5,038 billion kroner (RM2.73 trillion) as of end-2013.

Norges is managed by Norges Bank Investment Management, the asset management unit of the Norwegian central bank.

As of end-2013, it is invested in 8,000 stocks in 82 countries and owns 1.3% of the world’s listed companies, delivering annual returns of 5.7% since 1998. - By LIZ LEE Starbiz

Norwegian fund nibbling at Malaysian small and mid caps

PETALING JAYA: Norway-based Norges, one of the largest foreign funds investing in Malaysian equities, has been nibbling small to mid cap stocks that offer exciting upside here.

It has taken up small stakes in 53 Bursa Malaysia-listed companies, with total investments of around RM1.7bil, according to a fund manager.

Norges has a market value of 5,038 billion kroner (RM2.73 trillion) as of end-2013.

Norges began investing heavily in the Malaysian market since 2010 and is now sitting on a paper gain of some RM600mil, giving its entire holdings in Malaysia a value of some RM2.3bil.

Among Norges’ investments are a string of mid-sized oil and gas firms such as Alam Maritim Bhd, Daya Bhd, Scomi Energy Services Bhd and Barakah Offshore Petroleum Bhd.

It has even invested in special purpose acquisition companies Sona Petroleum Bhd and Cliq Energy Bhd.

“An investment from Norges is a positive endorsement from an independent party. It shows that the company has fulfilled the international standards of a foreign sovereign fund,” said one fund manager, who tracks Norges’ movements.

In Malaysia, Norges’ appointed fund manager since 2010 has been Kenanga Investors Bhd. Every year since then, sources said that Norges had allocated Kenanga at least RM150mil as it was pleased with its local counterpart’s performance.

Prior to Kenanga Investors, Norges’ appointed fund manager was RHB Investment Bhd.

“Kenanga Investors has been investing in small and mid caps even before the recent run-up in such companies over the last one year. The big run-up in many of the small oil and gas companies has significantly enhanced Norges’ performance here,” said a fund manager familiar with Norges’ strategy.

This indicates that Norges has a lot of interest in the sector, which isn’t surprising considering that Norges itself has gained its funds from the oil and gas revenues of Norway’s state-owned pension fund.

Aside from oil and gas stocks, Norges has also invested in other sectors such as banking and property.

“The reason it has done well is because it identified mid cap investing very early on. While the Employees Providents Fund (EPF) only articulated its interest in investing in mid-sized companies last year, Norges has been doing that for the last 3 to 4 years,” said the source.

Last June, EPF chief executive officer Datuk Shahril Ridza Ridzuan said it was looking at making investments in 40 mid-cap stocks, adding that the fund was already invested in a number of mid-sized companies.

He said the EPF was happy to support companies that fulfilled its investment criteria, which include having ample liquidity, the ability to generate cash flows and dividends, and having good corporate governance practices in place.

Slightly differing from the EPF which oftentimes take substantial stakes, Norges has a policy of not going beyond 3% in any particular stock, sources said.

“Norges is in the business of portfolio management. It isn’t in the business of running companies,” said the source.

Norges, also referred to as the Norwegian oil fund, is managed by Norges Bank Investment Management, the asset management unit of the Norwegian central bank. Norges is mandated to hold 60% in stocks and 35% in bonds, and is aiming to build up a 5% holding in real estate.

As at end-2013, it is invested in 8,000 stocks in 82 countries and owns 1.3% of the world’s listed companies. Between 1998 to 2013, Norges has been delivering annual returns of 5.7%.

 - By LIZ LEE Starbiz

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Raise the red flag, cut out the hypocrisy!

Raise the red flag

On The Beat By WONG CHUN WAI

Cut out the hypocrisy in the anti-palm oil campaign.

THERE’S no such thing as a national tree in Malaysia but if ever there has to be one, I would propose the oil palm tree. It may have originated from elsewhere, like the rubber tree, but it has been a miracle tree for this country.

Many Malaysians are aware that palm oil is used as raw material for cooking oil and soap but not many would know that it is also used in the making of instant noodles, cookies, biscuits, candles, washing powder and even medical and cosmetic products, including anti-ageing applications.

Even the tree’s trunks can be used for making furniture.

Palm oil can also be used to create biodiesel. Since 2007, all diesel sold in Malaysia must contain 5% palm oil, putting us at the forefront of promoting biodiesel.

But more importantly, the Malaysian palm oil industry earned a healthy RM60bil in 2010. This was an increase of RM10bil from 2009. Revenue is projected to reach RM80bil and the perception is that the industry will eventually be the country’s biggest money earner.

The income generated by the high price of palm oil has led to a mini economic boom in rural townships throughout the country and benefited the ordinary people.

In simple language, it means an assurance of jobs and income, with a guaranteed daily wage of RM90 in rural areas where the cost of living is low.

In contrast, as shown in some studies, the rural population of many developing countries often earns a mere RM7 per day and employment is sometimes limited or seasonal.

The fact is that while over one billion people have scarce access to food and jobs globally, in Malaysia, we rely on 300,000 foreigners to take on jobs we shun. This includes jobs in the palm oil industry.

In Malaysia, our concern is not lack of food but how to cut down on intake of carbohydrates to reduce our waistline. Slimming centres have become a multi-million ringgit business because of this.



For the foreign labourers working in oil palm plantations here, their employment means there will be food daily for over a million family members in Indonesia, Bangla­desh, the Philippines and other countries.

Oil palm is also important for the Malaysian smallholders and the retail business, which will enjoy the trickle-down effect. And the Government will gain as well, through the collection of corporate taxes, which are then used for education, health and infrastructure development.

It means a lot for the children of the smallholders and foreign workers who know they won’t have to go to bed hungry each night.

Over the past few months, however, their livelihood has been threatened by Western non-governmental organisations who have stepped up their campaign against Malaysia’s palm oil industry.

This time, they have widened their target audience to include even primary school children in the United States, Europe and Australia.

If the argument in the past was about health, this time the campaign has shifted towards the purported deforestation of land and the killing of orang utan. Naturally, these issues would be more emotionally appealing and fashionable given the global concern for environmental issues.

No one in his right mind would argue against protecting the environment but the red flag, rather than the green flag, has to be raised when the real issue is whether these NGOs are being funded by lobbyists from the soy bean, sunflower and other seed oil competitors.

There is a lot of hypocrisy here, really. Orang utans may have been affected but look at the shocking decline in the number of koalas in Australia as a result of human clearing and other factors.

It has been reported that the number of koalas has dropped by 95% since the 1990s and that only 43,000 of these tree-dwelling marsupial are left on the mainland. In southeast Queensland, the number has dropped from 25,000 to 4,000 in a decade. Just Google for more information.

Even the world’s 1.5 billion cows are being blamed. There’s a 400-page report quoting the United Nations, which has identified the world’s rapidly growing herds of cattle as a huge threat to the climate, forests and wild life. And they are being blamed for a host of other environmental crimes, too, from acid rain to the introduction of alien species, producing deserts to creating dead zones in the oceans, poisoning rivers and drinking water to destroying coral reefs.

The report by the Food and Agricultural Organisation, titled Livestock’s Long Shadow, surveys the damage done by cows, sheep, chickens, pigs and goats.

Livestock is responsible for 18% of the greenhouse gases that cause global warming, more than cars, planes and all other forms of transport put together – and there’s a lot of cows and sheep in Australia, I believe.

The Independent newspaper in Britain reported that burning fuel to produce fertilisers to grow feed, to produce meat and to transport it, and clearing vegetation for grazing, produces 9% of all emissions of carbon dioxide, the most common greenhouse gas.

And wind and manure from livestock account for more than one-third of emissions of another gas, methane, which warms the world 20 times faster than carbon dioxide.

But I feel that the greatest contributor to global warming has been left out – the great appetite of developed countries for fossil fuel, which is essential for their continued economic performance. The need to continue their lifestyle contributes to the huge emission of CO2.

It makes them look intelligent talking about orang utan and deforestation in exotic Borneo, which many might not even be able to locate on the map, while drinking Dom Perignon at fancy parties after being dropped off by chauffeur-driven gas-guzzling limousines.