Fund turns away from palm oil

Johan Tazrin Ngo at Kenanga Investment Management, whose funds got a lift from palm oil producers, is moving to cash because he expects a slowdown to affect Malaysia.

Ngo has profited from expectations of increasing demand for biofuels, which drove up the price of palm oil last year and shares of palm oil producers. Yet he has turned wary because of the drop in crude oil prices since July.
“It looks like a fantastic business when you have high oil prices,” said Ngo, chief executive at Kenanga Investment Management, a subsidiary of K&N Kenanga Holdings, an investment bank in Kuala Lumpur. If crude oil prices drop enough, though, there could be excess biodiesel capacity two years from now, he said. “You need $60 to $70 a barrel to be profitable.”

International Herald Tribune