Malaysia stock market and companies daily report December 29, 2010

Malaysia stock market and companies daily report December 29, 2010 ; Vibrant Malaysia Capital Market Ahead AmInvestment Bank (AMBB) is anticipating a vibrant 2011 for the capital market as ample liquidity is expected to encourage companies raise funds by making initial public offers (IPOs). AMMB was also expected to remain as one of the top bank in Malaysia in securing IPO deals next year and expects to do around eight IPOs next year.

IPO activities in Malaysia rebounded strongly this year after taking a dip in 2009, given the global economy slowdown and although slightly more than half of the companies that made its debut this year are trading below IPO prices, the year saw several large listings including the listing of Petronas Chemicals Group and Malaysia Marine and Heavy Engineering Holdings. AMMB also believes that the capital market will remain vibrant, as he sees more fund-raising activities by listed companies, backed by economic growth as well as the effects of the Economic Transformation Programme.

Significance: A more vibrant capital market in Malaysia plays a vital role in the improvement of performance across all sectors, and this will consequently lead to more corporations gearing up to ensure they will get a big slice of the various projects. Furthermore, with a growing capital market, the country is poised to attract more foreign investors.

Sime To Build Pilot Bio-Ethanol Plant
Sime Darby Plantation is partnering Japan’s Mitsui Engineering and Shipbuilding to build and operate a bio-ethanol demonstration plant, which will convert empty oil palm fruit bunches into bio-ethanol. The plant would cost about US$10 million (RM30.9 million) and the bio-ethanol plant will use fruit bunches as the main raw material, which is abundant and available throughout the year. The joint-venture plant will be built next to Sime Darby Plantation’s Tennamaram palm oil mill and this is to take advantage of the supply of the fruit bunches from the estate and the availability of other utilities.

Significance: Production of bio-fuel from non-food feedstock such as fruit brunches and other oil palm bio-mass will help to partially meet the global fuel demand without jeopardising food supply. In addition, environment-friendly bio-fuels from renewable sources will reduce the effects of global warming arising from use of fossil fuels.

Banks’ Earnings Growth To Moderate
Analysts said that banks are expected to have another good year in 2011 despite fierce competition and investors can look forward to them paying out higher dividends. Their earnings growth will however moderate after a strong 2010 which saw several headed for record full-year earnings. Banks with exposure to high-growth overseas markets, like Malayan Banking (Maybank) and CIMB Group Holdings will have an additional earnings boost. Analysts said that apart from net interest income, the sector’s earnings would also be driven by investment banking-related activities and dividends, meanwhile, are seen to be on an uptrend. Banks will have new rivals next year with the entry of five foreign commercial banks

Significance: While increasing competition would put pressure on margins and overheads, domestic banks would still be able to hold their ground and maintain their market share at around the current level as the new banks would also need time to roll out their operations and establish a foothold.