Posts Tagged ‘Palm Oil’
(Or “What stocks, ETFs to buy”)
A China slowdown need not be bad for everyone. Mr Frederic Neumann, Regional Economist at HSBC, distinguishes between hard and soft commodities. A Chinese rebalancing could actually be good for soft commodities*, such as wheat and soybeans*, if household spending were to rise.
Brazil’s loss, in other words, could be Argentina’s gain. Other commodities, such as palm oil**, used in processed foods, may also do better.
That could benefit countries such as Malaysia, which has ramped up palm oil*** production in recent years, and Indonesia**** – although the latter also produces hard commodities including coal.
On the other side of the ledger, some big oil importers***** could benefit from the weaker prices that a Chinese slowdown might produce.
*Think Olam, Wilmar, Golden Agri, Bumitama Agri, Kencana Agri and First Resources
**Think Wilmar and the other SGX plantation stocks.
***Think Felda, Sime Darby, United Plantations, IOI, Genting Plt, KL Kepong, TSH, Oriental.
****Think Astra Agro and London Sumatra Indonesia. Any other Indon listed plantations cos to think about? Do remember that the SGX-listed planters are mainly Indonesian planters and many of them are relatively new, giving them an advantage over the older Malaysian plantation players. Malaysian planters have also bought land in Indonesia partly because land in Malaysia is getting too expensive even in East Malaysia.
*****Think ETFs on Singapore, Thailand and Vietnam.
Commodities group Louis Dreyfus has agreed to take a minority stake in Malaysian palm oil firm Felda, it said on Monday, conditional on a successful June stock market float for Felda. The amount could be US$150m.
Louis Dreyfus Commodities told FT it was planning to take part in the wave of consolidation among agribusinesses, unveiling a US$7bn warchest, underpinned by cashflow and the trader’s first access to capital markets in its 160-year history. It is likely to raise US$500m in bonds soon.
The farm commodities trading giant, which earlier this month agreed to buy US sugar refiner Imperial Sugar for US$203m including debt, said it was to spend US$7bn building assets and buying companies, following investment of $4.9bn in the 2006-11 timespan.
It plans to move from middleman to a vertically integrated trading house: like Wilmar. Seems to be the fashion. Olam is doing this too.
Update on !7 May 2012:
Fidelity and Hong Kong-based Value Partners Group have agreed to become cornerstone investors of Felda Global Ventures Holdings’ US$3.3 billion (S$4.2 billion) initial public offering (IPO) in Malaysia, the Edge daily reported yesterday, citing unnamed financial executives involved in the listing.
Other cornerstone investors include Malaysian tycoons Quek Leng Chan and Chua Ma Yu, pension fund Employees Provident Fund and state-owned asset manager Permodalan Nasional, the report cited the executives as saying.