May 14, 2018 / 8:40 AM / a year ago

Malaysia's Felda Global Ventures stocks jump on hopes of clean-up

KUALA LUMPUR, May 14 (Reuters) - Shares of Malaysian palm oil producer Felda Global Ventures Bhd (FGV) surged as much as 24 percent on Monday on expectations that a corporate clean-up following last week’s general election would boost values.

FGV shares have slumped since its $3 billion initial public offering at 5.39 ringgit per share in 2012.

On Monday, FGV last traded 14.3 percent higher at 1.84 ringgit, outperforming the benchmark index which was up 1.1 percent at 0730 GMT.

Accusations of graft and poor company management within FGV caused its share price to slump in the last few years, but the election of veteran politician Mahathir Mohamad as prime minister has raised hopes of a company clean-up.

“We think a review of Felda will augur well for FGV, which has seen some selling pressure recently, which we believe was due to concerns over the potential injection of Indonesian assets,” said Ivy Ng, regional head of plantations research at CIMB Investment Bank.

The new government has pledged to clean up the governance and operations of state-linked entities including state plantation agency Federal Land Development Authority (Felda), FGV’s largest shareholder.

FGV had planned to take over some Indonesian palm plantations controlled by Martua Sitorus and Peter Sondakh, two of Indonesia’s richest men, in exchange for significant stakes in the company.

However the deal was put on hold last year after a boardroom tussle and corruption claims at FGV that led to the CEO’s suspension and the resignation of its chairman in June, sources told Reuters. (Reporting by Emily Chow Editing by)

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