Big caps turn penny stocks amid macro uncertainties

This article first appeared in The Edge Malaysia Weekly, on March 16, 2020 - March 22, 2020.
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THE uncertainty sweeping the equity market, from the Covid-19 outbreak and plunging energy prices caused by geopolitical tensions to the country’s political crisis, has seen several big companies shed billions in market capitalisation, reducing these market darlings to penny stocks.

A list of Bursa Malaysia-listed companies that were trading below 20 sen per share last Friday — generated using Bloomberg data and sorted by market cap — shows that the top 10 were mostly notable companies, with oil and gas (O&G) players Sapura Energy Bhd and Velesto Energy Bhd topping the list.

On March 9, O&G counters posted one of their worst days following the collapse of talks between Saudi Arabia and Russia after the latter refused to cut oil production further to stabilise prices. The current supply agreement will lapse at the end of this month.

Crude oil prices dropped to historical lows, dragging down several notable Malaysian O&G companies, especially those with upstream exposure.

Meanwhile, UEM Sunrise Bhd was one of the largest-cap stocks among counters priced between 20 sen and 50 sen. The property developer’s shares traded at a 52-week high of RM1.02 last April but have since been on a downward trend as the property market remains soft.

Two companies under tycoon Tan Sri Vincent Tan’s Berjaya Group were also among those priced between 20 sen and 50 sen. Berjaya Corp Bhd (BCorp) and Berjaya Assets Bhd (BAssets) closed at 22 sen and 28 sen respectively, on Friday. Other notable companies on the list include TA Global Bhd (down 9.8% YTD at 23 sen), Boustead Plantations Bhd (down 47.7% YTD at 40 sen), Hibiscus Petroleum Bhd (down 60.1% YTD at 37.5 sen), and Eastern & Oriental Bhd (down 33.6% YTD at 41.5 sen).


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