KLCI extends gains on news of incentives
Posted on | March 24, 2007
PETALING JAYA: The Kuala Lumpur Composite Index extended the week’s gains, putting on 12.38% to finish at 1,221.72 points yesterday, as investors reacted to Prime Minster Datuk Seri Abdullah Ahmad Badawi’s announcement of a slew of measures to boost the stock market, particularly the property sector.
Speaking at the Invest Malaysia 2007 conference, Abdullah announced that the Government would scrap real property gains tax nationwide, starting April 1.
He also announced a new package of incentives for certain zones within the Iskandar Development Region (IDR) in Johor.
Under the package, companies operating within the region would enjoy various benefits including being exempted from corporate income tax, and withholding tax on certain payments for 10 years.
However, the companies must be involved in the healthcare, tourism, financial services, creative, education and logistics industries.
Abdullah also said they would be able to enjoy freedom to raise capital globally and unrestricted employment of foreign workers.
Analysts said property developers and contractors would “benefit significantly” from the new measures.
“We are positive on these incentives as they will further boost the property market, with flow through uplift to the construction sector,” Citigroup Investment Research said in a report.
“More importantly, we think these incentives are a step in the right direction as they could help make Johor a very attractive place for foreign investments,” it added.
These incentives follow the recent announcement that foreigners were now allowed to buy properties above RM250,000 without seeking approval from the Foreign Investment Committee.
“Together, these measures should boost demand for residential and commercial properties in Malaysia, moving forward “ an analyst noted.
Said UOBKayHian in a report: “The positive policy changes will benefit the entire property sector, but the biggest upside will be seen for IDR (-related) developers.”
The research house, which has an “overweight” call on the sector, said attracting international developers, operators and investors to invest in Malaysian property would lead to a “big jump” in property values. “We expect a 50%-300% jump over the next two to three years,” it said.
Meanwhile, property and construction stocks were widely sprinkled among yesterday’s market gainers.
Shares in UEM World Bhd, which owns land in IDR, jumped 40 sen to RM4.02 while construction unit UEM Builders Bhd ended 12 sen higher to RM1.69.
Other heavily traded counters included Tebrau Teguh Bhd, which finished up 12 sen to RM1.04, Mulpha International Bhd warrants which put on 12 sen to 60 sen, Malaysian Resources Corp Bhd which ended 22 sen higher to RM2.07 and Damansara Realty Bhd, which was up 6 sen to 40 sen.
On the currency front, the ringgit rose to 3.4680/4710 against the greenback compared with Wednesday’s 3.4730/4760.
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