Saturday, March 19, 2011

#Stocks to watch:* Sarawak counters, banks, Notion Vtec

KUALA LUMPUR: Sarawak-based stocks could see strong trading interest in the week ahead, after Chief Minister Tan Sri Abdul Taib Mahmud announced the state legislative assembly will be dissolved on Monday, March 21 to pave the way for the 10th state election.

Other stocks which could see trading interest include banks after Bank Negara tightened the rules for the credit card industry to inculcate sound financial and debt management among credit card users.

NOTION VTEC BHD [] could also see positive interest as it expects the contribution from its new business -- both in the body mount and sub-assembly of lens -- to more than compensate for the expected reduction in orders for cam barrels due to the disruption and possible slowdown from the Japan earthquake.

On Friday, global stocks rose as traders took on riskier investments following a Libya ceasefire that reduced tension in the region, and after several central banks intervened to stabilise the yen.

Reuters reported that on Wall Street, stocks held gains but pulled back from session highs due to caution before a long weekend in Japan, where markets will be closed on Monday for a holiday.

The Dow Jones industrial average gained 85.74 points, or 0.73%, to 11,860.33. The Standard & Poor's 500 Index added 5.38 points, or 0.42%, to 1,279.10. The Nasdaq Composite Index rose 8.57 points, or 0.33%, to 2,644.62 -- well off its session high of 2,665.56.

At Bursa Malaysia, among the companies which could see trading interest following the announcement of the Sarawak polls are CAHYA MATA SARAWAK BHD [] (CMSB), NAIM HOLDINGS BHD [], TA ANN HOLDINGS BHD [], ZECON BHD [], ENCORP BHD [] and'' HOCK SENG LEE BHD [] (HSL).

The Edge FinancialDaily reported in February that CMSB surged 34% in three months leading to the dissolution of the state assembly on April 28, 2006. The report, quoting Maybank Investment Bank Research, highlighted that Naim advanced 13% while Ta Ann Holdings Bhd rose 18% during the same period. Zecon Bhd gained 10% while Encorp Bhd rose a staggering 67%.

Hock Seng Lee Bhd (HSL), meanwhile, climbed over two months to its 52-week high of 69.5 sen on March 17, 2006 ' a significant increase from its 52-week low of 51.9 sen on Jan 25, 2006.

Naim has been profitable over the last three years while CMSB is viewed to be at the forefront of Sarawak's business landscape.

Another major catalyst for the Sarawak-based counters is the Sarawak Corridor of Renewable Energy (SCORE) and the favourites being CMSB, Naim, HSL, KKB ENGINEERING BHD [], Dayang and Leader Universal Bhd.

Some of the high-profile projects planned under SCORE include an aluminium smelter expected to cost between RM7 billion and RM10 billion, Tatau pulp and paper factory (RM3 billion) and a zinc electro refinery (RM1.3 billion).

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