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Tuesday, July 27, 2010

RHB Invest buys 30.6m Sunway REIT shares

RHB Investment Bank Bhd, the appointed price stabiliser for Sunway Real Estate Investment Trust Bhd (Sunway REIT), has been buying the shares over the past 14 days to help stabilise price of Sunway REIT shares.

It bought some 30.6 million shares of Sunway REIT in stages over the past two weeks from prices ranging from 87.5 sen and 89.5 sen.

Under Section 9(3) of the Capital Markets and Services Act 2007, Capital Markets and Services (Price Stabilization Mechanism) Regulations 2008, an investment bank can be given the authority by the share issuer to help stabilise the share price.

The Act also states that the period for any stabilising action will be thirty calendar days starting from the first day of trading on the stock exchange of the relevant securities.
Regardless of the buying by the investment banker, Sunway REIT shares haven't moved much, but it has managed to stop their price from sliding.

Sunway REIT closed the day at 90 sen a share, unchanged from its initial public offering (IPO) price.

Jupiter Securities head of research Pong Teng Siew said he does not expect the stock to move much from the current levels.

"I also do not expect institutional shareholders to sell down the stock, but there is some retail selling," admitted Pong.

Apart from RHB who had bought the shares in batches, Sunway REIT non- executive chairman Tan Sri Jeffrey Cheah Fook Ling's Sunway Education Group Sdn Bhd also bought seven million shares in one go on July 13.

An analyst, who covers the stock, said the selling pressure on Sunway REIT will continue until its yields recollect to the sectorial average.

"One way for the yields to go up is for the price of the stock to go down." said the analyst, adding that Sunway REIT's yield is about 7.5 per cent against the industry average of between 8.5 per cent and 8.9 per cent.

The analyst, who did not want to be named, said only then she sees buying interest in Sunway REIT coming into play.

Pong, meanwhile, also noted that RHB may have used its powers as the market stabiliser to buy Sunway REIT shares because "there is no point having a capital loss on top of weaker yields".

He added that generally, market stabilisation activities only forestall the inevitable.

Sunway REIT, the property trust controlled by Sunway City Bhd, made its debut on Bursa Malaysia on July 8.

It had raised RM1.5 billion, making it the biggest IPO in Southeast Asia this year.

By Business Times

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