Saturday, October 8, 2011

#Stocks to watch:* Construction, plantations, Parkson, Tanjung Offshore

KUALA LUMPUR: Stocks on Bursa Malaysia may get a lift in the week ahead, starting Monday, Oct 10 from the more positive development from the euro zone, steadier Wall Street and from the Budget 2012 proposals.

Reuters reported that European leaders had over the week displayed more determination to fix problem banks, with the European Central Bank offering more help to struggling banks through the purchase of covered bonds and with a renewed offer of longer-term loans to ward off a new credit crunch.

The news agency said worries about the euro zone debt crisis have hit Wall Street hard in recent months, along with concern about stalling economic growth in the United States and China.

Meanwhile, the US Labor Department said on Friday employers last month added more jobs than analysts had expected. Nonfarm payrolls data for July and August also were revised upward.

On the local front, the RM232.8 billion Budget 2012 proposals to strengthen the economy while also focusing on the lower income group were expected to provide the market a firmer start.

Affin Investment Bank head of retail research, Dr Nazri Khan said the positive surprises were the listing of Felda Global Ventures Holdings Bhd, proposals to boost the higher education sector and CONSTRUCTION [] of infrastructure projects.

He said the Budget 2012 was medium term supportive on the broad local market.

"Overall, we view the PLANTATION [], finance and construction sectors to be key''beneficiaries of Budget 2012. Despite the tough fiscal challenge, we see the budget as clearly balanced for both people and economy,' he said.

On the outlook for the FBM KLCI, he said the 30-stock index, after being hammered to a 13-month low, is finally showing some potential signs of stability to make further upside next week.

Among the stocks to watch in the week ahead are infrastructure companies like GAMUDA BHD [], IJM Corp Bhd and Sarawak-based construction players like Hock Seng Lee Corp Bhd as the government speeds up infrastructure projects.

Nazri said the income tax exemption for private schools and allowance deduction for private sector sponsored training bodes well for the education players to develop the country human capital. Among the stocks to watch are SEG INTERNATIONAL BHD [] and HELP INTERNATIONAL CORPORATION [] Bhd.

The proposed listing of Felda Global Ventures could draw renewed interest in key commodity stocks like KUALA LUMPUR KEPONG BHD [], Kulim (Malaysia) Bhd, TRADEWINDS PLANTATION BHD [], IOI CORPORATION BHD [] and also MSM Malaysia Holdings Bhd.

Nazri also said broad measures to boost Islamic banking such as more tax exemption for Islamic banking products and allocation for public private partnership (PPP) facilitation fund should be an effective complement to the ongoing KLFID Economic Transformation Programme to strengthen banking service.

'In this case, banks such as CIMB, RHBCap and BIMB with high niche in Islamic finance are likely to be the major beneficiaries,' he said.

'Further, several public projects such as rebuilding schools, upgrading hospitals, improving flood mitigation programme and constructing public houses are likely to benefit construction stocks such as KEuro, AZRB and Binapuri,' he added.

Also stocks which could see trading interest are PARKSON HOLDINGS BHD [] and TANJUNG OFFSHORE BHD [].

The Edge weekly reported that Parkson Holdings Bhd shareholders may be in for a windfall when its Asean retail arm, Parkson Asia Pte Ltd, is listed on the Singapore Exchange.

The company has informed shareholders that the shares could be offered to them at a discount of about 30% to the proposed IPO price.

The weekly also reported Tanjung Offshore is expecting better financial results in the next two financial years as it ventures overseas to grow revenue and undertakes cost-cutting measures to boost its bottom line.

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