M’sian banks to rise as reforms gain hold, says JPMorgan

Written by Chan Tien Hin
Friday, 11 December 2009 11:22

KUALA LUMPUR: Investors should buy Malaysian banks and builders such as PUBLIC BANK BHD [] and IJM Corp Bhd as Prime Minister Datuk Seri Najib Razak’s bid to open up the economy and lure investors gains “traction”, JPMorgan Chase & Co said.

Najib’s efforts are “more than words, the new policy measures are gaining some momentum in terms of execution”, Chris Oh, an analyst at JPMorgan, said in a report dated Wednesday. “New listings are coming on stream” and “financial sector liberalisation is happening”.

The government on Nov 20 issued a banking permit to Industrial & Commercial Bank of China Ltd, the first overseas company to get the licence in nine years, and Goldman Sachs Group Inc this week won licences to set up fund management and corporate finance advisory operations in Malaysia.

JPMorgan’s other “top picks” include banking group AMMB HOLDINGS BHD [], power utility TENAGA NASIONAL BHD [], SIME DARBY BHD [], and GENTING BHD [], Asia’s largest listed casino operator. The FTSE Bursa Malaysia KLCI Index has risen 44% this year, trailing Southeast Asian benchmark indexes. JPMorgan’s Oh expects the benchmark gauge to rise to 1,400 by the end of 2010.

Najib has unveiled RM67 billion ringgit of stimulus measures in the past year to pull the economy from its first recession in a decade. He has also eased rules governing overseas investors, initial public offerings and property purchases in a bid to lure more foreign money.

“We hope to see more execution of policy reforms in 2010,” Oh said. Possible events to “watch out” for are “high-profile” infrastructure projects, stake sales in state- linked companies and new foreign investment, he said.

JCY International Bhd, a Malaysian hard-disk drive components manufacturer, plans what may be Malaysia’s second-largest initial public offering in six years, according to a draft prospectus filed to Malaysia’s Securities Commission on Tuesday.

Mobile-phone operator Maxis Bhd last month raised a record RM11.2 billion in Southeast Asia’s biggest initial share sale. — Bloomberg


This article appeared in The Edge Financial Daily, December 11, 2009.