icapital not keen on Bursa

KUALA LUMPUR: Closed-end fund icapital.biz Bhd is less enthusiastic about investing in the local stock market at present as it thinks most stocks are currently trading at expensive valuations.

“Shares on Bursa Malaysia are not cheap… many stocks are overvalued at present,” icapital.biz managing director Tan Teng Boo said.

Tan revealed that the fund was currently holding around RM200mil, or about 50% of its net asset value, in cash, waiting for the right moment to enter the market to invest.

He added that it had been maintaining a high cash position for the last nine to 10 months, not only because the market was looking expensive, but also because of the surrounding domestic political and international economic uncertainties.

“We only look at undervalued stocks as we believe in having a sufficient ‘margin of safety’ for our investments,” Tan explained during a press briefing in conjunction with its upcoming 2013 Investor Day.

Themed “Great Beginnings,” the event will be held on Oct 26 at Kuala Lumpur Convention Centre from 9am to 6pm. It will feature special sessions with Youth and Sports Minister Khairy Jamaluddin, Lembah Pantai Member of Parliament Nurul Izzah Anwar, Asian Development Bank economist Niny Khor, and corporate captains Tan Sri Lodin Wok Kamaruddin, Datuk Seri Ajib Anuar and Aminul Rashid Mohd Zamzam, among others. There will also be games with exciting prizes.

Tan said he expected the conference to attract 10,000 participants.

When asked what he thought would be a reasonable level for icapital.biz to enter the local stock market, Tan said it would be when the valuation hovered around 11 to 12 times price-earnings (PE), compared with the present level of 16.5 to 17 times PE.

“The present valuation is not cheap based on our economic growth that has slowed and corporate earnings growth that is not strong,” Tan explained.

He pointed out that his team was now sceptical about Asean capital markets in general. Besides the Malaysian stock market, Tan said stocks on the Philippines’ market were also overpriced at their present levels, while the Jakarta stock market was plagued by Indonesia’s fundamental economic problems and Thailand’s stocks looked less attractive after the country’s economy slipped into a recession.

Meanwhile, Tan said he was looking to double the icapital.biz’s staff size from the present 70 people to facilitate its expansion plan. He revealed that his aim was to make icapital.biz, a truly global investment house within the next 10 years.