STRATEGY: Maxis in KLCI - What’s Hot and What’s Not

While our Sep 23 report on Maxis’ upcoming IPO focused on the Telco sector and Maxis, in this report, we look at the potential impact on the FBM KLCI if indeed Maxis is listed before Dec 11, ’09, which is when a revision to the index’s constituents, if any, will be announced. As we believe Maxis may be included in the FBM KLCI to replace a less liquid and smaller cap component with a lower free float, we believe that Malaysian Airline System (MAS), Petronas Dagangan and RHB Capital could potentially bereplaced. If MAS were to be replaced by Maxis, the latter would be the 5th largest KLCI component stock, with a weightage of 7.3%. The KLCI’s adjusted market cap would then rise 7.4% to RM396.1bn. We believe Maxis will spur some short t erm interest inthe market, with non-T elco dividend plays such as Petronas Gas, Petronas Dagangan, PLUS and Tanjong potentially seeing an outflow of funds, other than Telco dividend plays such as Digi and TM. Market interest should be a boon to Liquid Foreign Darlings such as CIMB (BUY TP: RM13.00), Genting (TRADING BUY TP:RM7.90) and Axiata (BUY TP:RM3.68).

Stock in focus - GENTING SP

-- GENTING SINGAPORE


- BNP Paribas initiated on Friday itscoverage on casino

operator Genting Singapore with "Buy" recommendation and a target

price of S$1.35 ($0.953), citing the positive outlook with the

opening of its Singapore operation. [ID:nN24477575]

Asia News

According to industry players, the wealth of rich Asian individuals is set to grow at a compounded rate of 12.8 percent over 5 years till 2013. The fall of Lehman Brothers and the financial crisis sliced a quarter of the wealth of high net worth individuals. The prospects for Asia, however, still appear to be relatively bright. Private banks are expected to boost their expertise in order to capture the opportunities arising from a higher demand for wealth management services. It is estimated that Singapore would need 900 to 1,200 experienced private bankers over the next 5 years. Experts told a regional industry seminar in Singapore that pay structures for relationship managers will need to be overhauled, by reviewing bonuses and rewarding staff based on indicators like client satisfaction and investment performance, and less on fixed financial targets.

EPF is big brother who help maybank price up :)

9:45AM MAYBANK Employees Provident Fund Board (5,012,100 Shares Transacted)

Oilcorp down; company fails to meet interest payment due

PETALING JAYA: Oilcorp Bhd’s share price fell after the company failed to meet its interest payment of RM1.6mil due and payable last Thursday.
The stock was one of the most heavily traded on the stock exchange. At 2.45pm, the shares were down 5.5 sen, or 17%, to 26 sen.
The stock has resumed trading today after the shares were halted from trading last Friday. The interest payment is part of the facility agreement between EON Bank, Capone Bhd and Oilcorp under a primary collateralised loan obligation (CLO).
In a filing to Bursa Malaysia, the company said it did not have sufficient funds to settle the interest payment as the receipt of certain large receivables was delayed.
“The company has on Sept 15 written to Malaysian Trustees Bhd to seek indulgence of time of up to one month from the due date to remedy the matter,” Oilcorp said, adding that the lender and trustee had yet to declare Oilcorp to be in default under the facility agreement.
If such a notice were served to Oilcorp to declare the default, then the CLO is to be immediately due and payable together with the accrued interest, it said.
While such default would impact business, financial and operations of Oilcorp, it expects to resolve the issue within the indulgence period if granted, and is pursuing the payment of receivables.
The company is taking legal advice as to whether such a default constitutes an event of default under any other loan agreements.
“As the circumstances today, the directors are unable to form an opinion that the company will be able to meet its debts as they fall due and accordingly the company is not solvent,” Oilcorp said.

Macroeconomics

· In US, manufacturing activities was upheld, signaling solid 3Q; shipments, new orders and employment grow; prices growth slows. The index of US leading economic indicators rose for 5 consecutive months. The Conference Board’s gauge of the economic outlook for the next 3 to 6 months rose 0.6% in Aug. The gains in stock prices, consumer confidence and homebuilding results in buoying the leading index. On the other hand, US home prices rose 0.3% in Jul from the previous month, in a sign that the housing recovery is tenuous. The house price index fell 4.2% for the 12 months ended in Jul, the smallest decline this year.

· UK homesellers raised asking prices in Sep as confidence in the property market improved and the supply of homes dwindled. The average cost of a home increased 0.6% to £223,996 after falling 2.2% in Aug, indicating that confidence is up.

· Japan’s leading economic indicator was at 82.5% in Jul, compared with 80.9% the previous month, suggesting that the economy is recovering.

· At home, the foreign exchange reserves rose by US$0.22bn in 1H Sep to US$93.5bn as at 28 Aug. This suggests that the repatriation of export proceeds was more than sufficient to pay off import bills. The inflow of foreign portfolio funds might have contributed to the increase as well.

FBM KLCI : Slowly But Surely

The FBM KLCI closed at its highest level for the year before the long weekend. Although the market has been stuck in a tight range over the last eight trading days, its trend is still generally up. We had expected the key index to run faster after the previous peak of 1196.46 pts was violated, but most importantly, that the uptrend remains fully intact. Even if the market were to continue to inch up slowly, it is likely that the uptrend will continue to extend further from the current level.

The FBM KLCI’s near-term technical outlook remains firmly bullish. As the daily RSI closed at the 73.2 pt-level last Friday, there is no doubt that there is room left for further upside extension.

From the current level, an immediate resistance lies at the 1,242 pt-level, followed by the 1,296 pt-level. To the downside, there is initial support at the 1,212 pt-level and the next support is found at the 1,196.5-1,200 pt area.