EPF, KWAP forced to buy Felda shares? Don't try to block the truth - Muhyiddin told

UPDATED PKR investment bureau chief Wong Chen ticked off Deputy Prime Minister Muhyiddin Yassin for trying to gag public discussion on the use of national pension funds to buy plunging Felda shares, and threatening to have the Securities Commission and Malaysian stock exchange take action against Opposition Leader Anwar Ibrahim for raising the matter.

"We are not cooking up data. This is data reported by analysts and this is what we are bringing to the public's attention. The question remains, despite analysts pointing out that the shares are no longer on the uptrend, why did EPF and KWAP continue to buy and in such huge amounts. We are asking EPF to explain these purchases which are against market movement to contributors who are concerned and have the right to know," Wong Chen told a press conference on Friday.

"Did EPF and KWAP receive any implicit or explicit request from the government or any politician to buy Felda shares? Is there any breach of trust or negligence - explain to the public then. Almost all of us have a stake in EPF, KWAP. Is there a correlation with all the big guys (BN cronies) selling their shares and EPF buying from them? These are all questions that must be brought to the people's notice and duly answered."

Protecting the cronies

Wong Chen was responding to recent comments made by Muhyddin that Anwar was 'envious' of the Felda listing - the world's largest IPO in 2012 - and wanted to politicise the issue so that the share price would continue to fall.

"I'm not sure whether the Securities Commission or Bursa Malaysia can take action against Anwar for making a statement aimed to incite," Bernama had reported Muhyiddin as saying.

Last week, Anwar had warned Felda shares would have been priced lower if not for the intervention of several government institutions such as the EPF. He said it was clear the entire listing - which necessitated settlers giving up all their land totalling some 800,000 acres - was aimed to benefit BN cronies.

"The only ones who benefit are cronies, including FGV’s chairman and board of directors who got the shares for nothing and sold them early for profit. Then the price drops,” said Anwar.

Buy recommendations disappearing fast

At Friday's press conference, Wong Chen showed slides from a Bloomberg screen page that compiled the views of market analysts. According to Wong, the overall views and recommendations of the analysts had turned negative from as early as August 9 last year, with "buy recommendations disappearing fast".

"From that date to 4^th January 2013, despite the overall negative views on the stock and it falling share price, EPF continued to buy. It added another 46 million shares to its portfolio. For the same period KWAP added 10 million shares. The buying behavior of EPF and KWAP are extremely contrarian. This seems unbecoming of a pension fund," said Wong.

The buying activity resumed in June till early this month and the overall forays in the open market from 29^th June 2012 to 4^th January 2013, resulted in EPF spending an estimated RM455mil and KWAP RM305mil, he added. At the current market prce hovering aound RM4.60, this translates into a paper loss of RM40 million for EPF and RM35 mil for KWAP.

"PKR believes that EPF holders and the civil servants have a right to know whether these buys, a significant portion of which is against analyst recommendations and market views, are politically motivated," said Wong.

EPF is the Employees provident Fund to which most working Malaysians contribute, while KWAP or Kumpulan Wang Persaraan manages the contributions from the staff of the Federal Government, Statutory Bodies, Local Authorities and other Agencies.

Mopping up shares sold down by BN cronies?

Wong Chen did not discount the possibility that the EPF and KWAP may be mopping up shares sold off by Umno cronies, who were awarded huge chunks of stock even larger than those reserved for the Felda settlers during the listing exercise last year.

"In the IPO, there was controversy over who are these Miti-approved investors who were given 3 times the number of shares alloted to the settlers. This is a mystery until now but to qualify as a Miti investor you need to have at least RM3mil in net worth. In other words, these are the rich guys. Why are the rich guys given so much more shares than the Felda settlers? Are they the ones selling off now and EPF, KWAP asked to pick up from them? This is the question going around town but we won't know until information is made public," Wong Chen told Malaysia Chronicle at the sidelines of the press conference, adding that privacy laws may restrict the release of such data.

It is believed that the Miti-approved investors hold around 300 to 600 million ishares. Miti stands for the Ministry of International Trade and Industry.

Pension money at stake, losses on a worsening trend

Wong Chen further warned that the "paper losses" held by EPF and KWAP were on the deteriorating trend.

"The current average analysts target price for FGV is RM4.19. If the share price falls to that level, EPF and KWAP would have lost RM146mil and RM129 mil. If the Felda share price falls to RM3.53 which is the second lowest among the 12 most recent recommendations on the stock (furnished by Alliance Research), EPF and KWAP would have paper loss of about RM327 mil and RM295 mil," said Wong.

Malaysia Chronicle