Maybank IB Views

MARKET COMMENTS
Special Feature
Sarawak goes to the polls

Opportunity to accumulate. The Sarawak state assembly will dissolve today, paving the way for the 10th state elections. Share prices of Sarawak stocks had historically corrected after the dissolution of the state assembly post a short run-up, but this time around, share prices of most stocks have been down, affected by the external uncertainties. Any further weakness is an opportunity to accumulate the Sarawak construction stocks which are expected to see some major awards in the next few weeks. Hock Seng Lee (Buy; TP: RM2.30) is our pick.

Market Focus
Japan's disaster: Assessing the impact

Yen stabilises. G-7's agreed intervention in selling the Yen has bought back stabilisation, resulting in the currency pulling back to close at 80.58 per USD last Friday against a high of 76.25. The Yen, which rose a high 7.3% post the 11 March earthquake and tsunami at north-east Japan but prior to the G-7 agreed intervention, closed just 1.5% up since the disaster and after the agreed currency intervention. The earlier Yen climb was in anticipation of overseas money repatriation to Japan for rebuilding efforts. A stable Yen would limit the damage on Japanese exporters' earnings once factories restart.

SECTOR UPDATE
Banking: Overweight
Nipping the CC problem in the bud

System credit card (CC) risk manageable. System CC risks remain manageable at this point in time, and we see little impact to the local banks. Nevertheless, with high household debt, the threat of inflation negatively impacting disposable income levels, as well as signs of CC loan growth momentum beginning to outpace overall industry loan growth, BNM's vigilance and speed in nipping this issue in the bud is highly commendable. No change to our earnings forecasts and calls.

Technicals
The FBM KLCI rose 8.27-points and closed at 1,503.89 last week. The weaker support areas for the FBM KLCI are located in the 1,474 to 1,500-zone. The very firm resistance zone of 1,503 and 1,576 will see heavy liquidation activities.

Trading idea for today is a TAKE PROFIT call on TENAGA.

Other Local News
TM: Hopes to launch mobile voice services by year-end. Telekom Malaysia Bhd (TM) hopes to launch its mobile voice services by the end of this year. The company signed a memorandum of understanding with Celcom Axiata Bhd recently. Both companies will look into the collaborations in several areas, which include the possibility of TM becoming an MVNO (mobile virtual network operator) via Celcom's network. (Source: Business Times)

UEM Land: RM6b invested in Nusajaya. A total of RM6.2b in new investments from local and foreign investors have been received for development projects in the eight catalyst developments (except EduCity components) in Nusajaya. The investments included RM500m from Biocon Ltd, India to invest at SiLC (Southern Industrial and Logistics Clusters), RM2.3b Canal Homes at Puteri Harbour by Bandaraya Development Bhd and RM500m by Pantai Group for the Gleneagles Hospital at Medini. (Source: The Star)

Scomi Engineering: Likely to bag Brazillian monorail job. Scomi Engineering Bhd and its Brazilian consortium partners are likely to bag a USD782 m (RM2.4b) monorail job in Manaus, Brazil. (Source: The Edge Financial Weekly)

Rubber glove: Rubber price expected to be influenced by Thai decision. Malaysian rubber prices are expected to be influenced by the outcome of Thailand's national rubber committee meeting this week. The meeting would discuss whether to ask other major producers, Malaysia and Indonesia, to join the move to prevent a further drop in prices. (Source: The Star)

Plantation: EU not supporting NGOs against palm oil. The European Union is not using environmental non-government organisations as a "fifth column" to help it achieve its Renewable Energy Directive (RED) which places palm oil for biofuel at a disadvantage. RED is a result of a legislative decision between the council and parliament. RED is advancing sustainability in palm oil especially biofuel but it is not restricted to palm oil only. (Source: Business Times)

Aviation: Airport Operator interested in getting AirAsia X to fly to Munich. Munich Airport is interested to get AirAsia X to fly to Munich. (Source: Bernama.com)

Property: IRDK in reverse takeover talks. IRDK Group, a property development and construction outfit, says it is in talks with several listed property developers and manufacturing firms here for a reverse takeover. It expects a deal to materialise within the next 12 months to 18 months. (Source: Business Times)