KUALA LUMPUR, May 15 — Shares for engineering firm George Kent Holdings Berhad and IT services company MYEG Berhad continued their downward spiral for the second day after both stocks hit the limit down shortly after markets opened this morning.
The sharp drop was attributed to close association of these two companies to toppled prime minister Datuk Seri Najib Razak and his wife Datin Seri Rosmah Mansor.
Limit down refers to a mechanism that automatically stops trading of a company’s stocks to prevent its value from declining further after its share price has slid by 30 per cent.
MyEG shares dropped 54 sen and were last traded at RM1.27 while George Kent plunged 82 sen to RM1.94.
“The market capitalisation which was wiped out for MYEG was around RM4.7 billion while for George Kent, it was around RM1 billion,” Dick Lim a remisier at Maybank Investment Bank told Malay Mail when contacted today.
CIMB Investment Bank has downgraded MYEG shares to “reduce” with a target price of RM1.05 on possible loss of future earnings from its goods and services tax (GST) monitoring project.
The news Pakatan Harapan (PH) government, led by Najib’s former mentor Tun Dr Mahathir Mohamad, is expected to abolish the GST within the next 100 days.
According to CIMB, MYEG’s GST monitoring project is at risk and “could be in trouble” now the PH pact is in power.
George Kent’s chairman is Tan Sri Tan Kay Hock, a known close associate to Najib.
George Kent had been awarded the contract for the extension works of the LRT3 project. It has also received a letter of award from the Public Works Department to design and build a 150-bed hospital in Tanjung Karang, Selangor, for RM277.2 million.