Highlight Mobius sees no long-term impact from 1MDB issue on Malaysian stock market

by **Cals** Thu 12 May 2016, 00:05

Highlight

[size=28]Mobius sees no long-term impact from 1MDB issue on Malaysian stock market

By Meena Lakshana / theedgemarkets.com | May 11, 2016 : 3:15 PM MYT

KUALA LUMPUR (May 11): The impact of negative news about 1Malaysia Development Bhd (1MDB) is short-term in nature and is unlikely to dent investors' confidence in the Malaysian stock market, said Templeton Franklin Emerging Markets Group executive chairman Dr Mark Mobius.

"The impact of news on 1MDB on the stock is short-term in nature and will not have a long-term impact [on the economy and financial market]," he told reporters today on the sidelines of the Global Islamic Finance Forum 5.0.

"You will not see investors pulling out (of the stock market) because of that. It will not affect investors' confidence. Investors will look at individual companies and the stability of government," he added.

On governance concerns arising from 1MDB's financial management, Mobius said concerns on governance is a global phenomenon, with recent revelations arising from the Panama Papers.

"The whole issue of 1MDB is getting buried by Panama Papers," he added.

Fitch Ratings had said yesterday 1MDB's missed bond coupon payment late last month underlines ongoing uncertainty around the finances and governance of the state-owned investment fund.

"We have long viewed 1MDB as a close contingent liability of the sovereign, given its strong links with the state, including Prime Minister Datuk Seri Najib Razak's role as chairman of its advisory board (which is being dissolved as the fund is wound down)," the rating agency had said.

1MDB will have to make an interest payment of US$52.4 million on a second US$1.75 billion bond it issued, due today.

The bond was issued by 1MDB Energy Ltd, with proceeds channelled towards the purchase of power assets from Malaysian billionaire T Ananda Krishnan.

The second bond, together with the first issuance of US$1.75 billion by 1MDB Energy (Langat) Ltd with a 5.75% coupon rate maturing in 2022, were arranged by Goldman Sachs and co-guaranteed by Abu Dhabi's International Petroleum Investment Co (IPIC).

On April 25, 1MDB had missed a US$50 million coupon payment on a 5.75% bond due in 2022 as part of its dispute with IPIC. IPIC subsequently made the coupon payment.

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