KLCI falls 25.72 points in April

KUALA LUMPUR (April 30): The FBM KLCI closed higher on Monday but fell some 25.72 points in April, as investor sentiment took a beating given rising external and domestic uncertainties.

The FBM KLCI rose 2.81 points to close at 1,570.61 on Monday.

Gainers trailed losers by 297 to 388, while 318 counters traded unchanged. Volume was 945.42 million shares valued at RM1.38 billion.

Asian shares were mixed on Monday as weaker-than-expected U.S. growth data left open the possibility for more monetary stimulus from the Federal Reserve, but trading was subdued with Japanese and Chinese markets closed, according to Reuters.

At the regional markets, Hong Kong’s Hang Seng Index rose 1.7% to 21,094.21, South Korea added 0.34% to 1,981.99, Taiwan’s Taiex was up 0.28% to 7,601.72 while Singapore’s Straits Times Index shed 0.26% to 2,973.91.

ON Bursa Malaysia, BAT was the top gainer and rose 74 sen to RM55.54, Aeon Credit added 64 sen to RM10.70, Shell rose 36 sen to RM10.28, Petronas Dagangan 30 sen to RM19.36, Nestle and Panasonic gained 20 sen each to RM55.30 and RM22.70, OSK 15 sen to RM1.71, Tradewinds and Knusford added 14 sen each to RM9.78 and RM1.94, while Toyo Ink gained 12 sen to RM1.53.

Ariantec was the most actively traded counter with 399.1 million shares done. The stock fell one sen to 24.5 sen.

Other actives included Utopia, Metronic, CSL, Astral Supreme, Focus, DRB-Hicom, Bumi Armada and BIMB warrants.

Decliners on Monday included SAM Engineering, Dutch Lady, Petronas Gas, MMHE, Kluang, Dayang Enterprise, Subur Tiasa. UAC and Bumi Armada.



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KLCI up at mid-day break, moves above 1,570-level

KUALA LUMPUR (April 30): The FBM KLCI brushed off the concerns arising from last weekend’s Bersih 3.0 rally that turned ugly and inched higher on Monday, in line with the gains at most regional markets, lifted by select blue chips in early trade.

The FBM KLCI was up 4.01 points to 1,571.81 at the mid-day break.

Gainers trailed losers by 229 to 285, while 299 counters traded unchanged. Volume was 398.95 million shares valued at RM422 million.

Asian shares rose on Monday as weaker-than-expected U.S. growth data left open the possibility for more monetary stimulus from the Federal Reserve, but trading was subdued with Japanese and Chinese markets closed, according to Reuters.

At the regional markets, Hong Kong’s Hang Seng Index rose 1.12% to 20,974.40, south Korea’s added 0.14% to 1,978.20, while Singapore’s Straits Times Index fell 0.20% to 2,975.62 and Taiwan’s Taiex shed 0.09% to 7,473.49.

MIDF Research in its weekly fund flow analysis said Malaysian stocks continued to attract foreign money last week.

It said foreign investors bought on net basis, Malaysian-listed shares amounted to RM356.1 million compared with RM408.8 million the week before. Foreign investors have now been net buyers of Malaysian stocks for 11 consecutive weeks now.

“We cross over to May this week.

“The adage “Sell in May and go away” is certainly not uncorroborated — the KLCI had recorded negative return for the month in six out of the last 10 years, averaging -3.2%. We therefore begin the month with a historical obstacle to surmount,” it said on Monday.

On Bursa Malaysia, Petronas Dagangan was the top gainer and added 24 sen to RM19.30, Aeon Credit and Nestle gained 20 sen each to RM10.26 and RM55.30, Tasek and Takaful was up 15 sen each to RM8.70 and RM4, Tradewinds PLANTATION []s up 14 sen to RM5.84, Toyo Ink and Carlsberg added 12 sen each to RM1.53 and RM11.60.

Meanwhile, RHB Capital and OSK Holdings rose on gaining the ministry of finance nod for a merger. RHB Capital rose 11 sen to RM7.36 whiel OSK was up 13 sen to RM1.69.

Ariantec was the most actively traded counter with 201.62 million shares done. The stock fell half a sen to 25 sen.

Other actives included Utopia, DRB-Hicom, CSL, Focus, Daya Materials, Bumi Armada and YTL Corp.

Decliners at mid-day included Dutch Lady, Jaya Tiasa, PacificMas, UAC, Amway, Bumi Armada and MMHE.



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RHB Capital, OSK up on getting nod for merger

KUALA LUMPUR (APRIL 30): Shares of RHB CAPITAL BHD [] and OSK HOLDINGS BHD [] advanced on Monday after they obtained the finance ministry's approval to merge RHB's banking group with OSK's investment bank, according to filings to the local bourse.

At 10.30am, RHB Capital added 12 sen to RM7.37 with 831,900 shares done while OSK gained five sen to RM1.61 with 1.11 million shares traded.

"Further details on the possible merger will be announced upon the execution of a conditional share purchase agreement between OSK and RHB," both RHB and OSK said in separate filings to Bursa Malaysis Securities Bhd last Friday.



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OSK Investment Bank chairman Choong retires

KUALA LUMPUR (Jan 30): Dr Choong Tuck Yew has retired as director and chairman of OSK Investment Bank Bhd (OSKIB), with effect from Jan 28.

OSK HOLDINGS BHD [] said on Monday that with the approval from Bank Negara Malaysia, the senior independent non-executive director, Foo San Kan has been re-designated as chairman of OSKIB with effect from Jan 29 for three years.



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RHB hopes for merger nod with OSK by early 2Q

KUALA LUMPUR (Jan 20): RHB CAPITAL BHD [] which has submitted an application for Bank Negara's approval for a proposed merger with OSK HOLDINGS BHD [], hopes to get the nod by the early second quarter of this year, RHB Bank Bhd Deputy Managing Director, Renzo Viegas said.

Both parties had submitted the application on Jan 11 to seek approval from the Minister of Finance via Bank Negara for the possible merger of businesses of OSK Investment banking group and RHB banking group.

"We will utilise regional branches of OSK for commercial banking if the merger kicks off," Viegas said at the launch of the RHB "Now Race For A Ducati" campaign.

HwangDBS Vickers Research had said the merger would enable RHB Cap to tap into OSK's entrenched retail channel -750 remisiers and dealers- to distribute equity and debt offerings, while grabbing a niche position in the capital markets.

The potential merger of RHB Cap and OSK Investment Bank Bhd will create the largest stockbroker in Malaysia.

At midday, both RHB Capital rose three sen to RM7.33 and OSK Holdings inched up one sen to RM1.80. - Bernama



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RHB, OSK submit applications to BNM for possible merger

KUALA LUMPUR: RHB Capital Bhd (RHBCap) and OSK Holdings Bhd have submitted their application for the possible merger of the businesses between RHB banking group and OSK Investment Bank.

In separate announcements to Bursa Malaysia here yesterday, both banks said they had submitted their applications to Bank Negara Malaysia (BNM) for the approval of the central bank and the Minister of Finance for the proposed merger.

To recap, at end-September, RHBCap announced that it wrote to BNM for approval to commence negotiations with OSK Investment Bank on a possible merger of businesses. The central bank gave its approval on Oct 13.

The pricing of the deal is not known. Nonetheless, The Edge weekly in October reported that RHBCap was likely to pay between 1.9 times and 2.2 times book value of OSK Investment and it would likely involve a share swap.


This article appeared in The Edge Financial Daily, January 12, 2012.



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RHB Capital, OSK advance on submitting applications for merger

KUALA LUMPUR (Jan 12): Shares of RHB CAPITAL BHD [] and OSK HOLDINGS BHD [] advanced in early trade n Thursday after they jointly announced that they had submitted their applications for the proposed merger of businesses between OSK investment banking group and RHB banking group to Bank Negara Malaysia and the Minister of Finance.

At 9.05am, RHB Capital added four sen to RM7.31 with 23,700 shares traded while OSK gained two sen to RM1.86 with 1.68 million shares done.

Alliance Research vice president for equity research Cheah King Yoong upgraded his recommendation on RHB Capital from Neutral to Trading Buy, and upped the target price for the stock.

“With the impending proposed merger exercise drawing closer, we have removed our 10% discount from our valuation and raised our target price to RM8.70.

“Should the actual merger details to be announced prove to be more favourable to RHBC’s shareholders, than what has been speculated by the market, it could serve as a near term re-rating catalyst for RHB Capital,” he said in a note Thursday.



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HDBSVR sees KLCI trading in narrow range, key hurdle at 1,530

KUALA LUMPUR (Jan 12): Hwang DBS Vickers Research said the FBM KLCI will probably move sideways inside a narrow trading range ahead due to a dearth of fresh market leads on Thursday.

It said that on the chart, the resistance threshold of 1,530 remains a key hurdle for the bellwether to clear.

On Wall Street, key U.S. equity indices ended between -0.1% and +0.3% as buying interest (especially in banking and TECHNOLOGY [] stocks) offset the lingering Euro Zone sovereign debt concerns.

In terms of local corporate developments, HDBSVR said there could be interest in: (a) OSK Holdings and RHB Capital, after both companies said they have submitted an application to Bank Negara Malaysia to seek approvals in relation to a possible merger of their businesses; and (b) Bina Puri Holdings, in response to a media report saying that it is close to securing the privatisation concession for a highway in Pakistan.



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RHBCap seeks nod for OSK Invt buy

RHB Capital Bhd, Malaysia’s sixth-biggest banking group, said it asked the central bank for approval of its proposed purchase of OSK Holdings Bhd’s investment bank.

“An application to Bank Negara Malaysia has been made today for the proposed merger,” RHB and OSK said in separate filings to the stock exchange, without giving details. The lender may pay as much as RM1.9 billion (US$604 million) in shares for OSK Investment Bank Bhd, three people with knowledge of the matter said on Dec. 29.

Buying OSK Investment would allow RHB to overtake CIMB Investment Bank Bhd. as the biggest stockbroker in Malaysia, based on data from the country’s stock exchange. Malaysian banks and brokerages have been merging amid increased competition from foreign lenders such as Bank of China Ltd and Sumitomo Mitsui Banking Corp.

Hong Leong Bank Bhd acquired EON Capital Bhd for US$1.7 billion in May. K&N Kenanga Holdings Bhd, a brokerage part-owned by Deutsche Bank AG, is in talks to buy the investment banking and broking operations of local rival ECM Libra Financial Group Bhd, two people with knowledge of the matter said on Dec. 1.

Both RHB and OSK shares were unchanged at the 12:30 p.m. break in Kuala Lumpur. OSK held at RM1.80 while RHB was at RM7.27. -- Bloomberg



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Flash: OSK, RHB submit applications to BNM for possible merger

KUALA LUMPUR (Jan 11): OSK HOLDINGS BHD [] and RHB CAPITAL BHD [] have submitted their applications for the possible merger of the businesses between OSK investment banking group and RHB banking group.

They said in separate statements to Bursa Malaysia on Wednesday that they had submitted their applications to Bank Negara Malaysia (BNM) for the approval of the central bank and the Minister of Finance for the proposed merger.



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RHBCap said near OSK unit deal at RM1.9b

RHB Capital Bhd, Malaysia’s sixth-biggest banking group, may pay as much as RM1.9 billion (US$598 million) in shares for OSK Holdings Bhd’s investment bank, three people with knowledge of the matter said.

Talks between the two companies are now centered on a price range of RM1.8 billion to RM1.9 billion, said the people, who asked not to be identified as talks are private. The two banks expect to reach an agreement and seek approval from Malaysia’s central bank by mid-January, two people said.

RHB and OSK said on Oct. 14 that the central bank granted them a three-month window to negotiate the purchase. One of the remaining issues to be resolved is the treatment of some of OSK’s outstanding debt, one person said.

Buying OSK Investment Bank Bhd would allow RHB to overtake CIMB Investment Bank Bhd as the biggest stockbroker in Malaysia, based on data from the country’s stock exchange. Malaysian banks and brokerages have been merging amid increased foreign competition. Hong Leong Bank Bhd. acquired EON Capital Bhdfor US$1.7 billion in May, while K&N Kenanga Holdings Bhd, a brokerage part-owned by Deutsche Bank AG, is in talks to buy the investment banking and broking operations of local rival ECM Libra Financial Group Bhd, two people with knowledge of the matter said on Dec. 1.

RHB may issue new shares worth as much as 10 percent of its existing equity to pay for the OSK unit, three people with knowledge of the matter said last month. The acquisition is still expected to be paid for in stock, two people said. The final price of the purchase will depend on what value is applied to the RHB shares that are issued, one person said.

RHB Chief Executive Officer Kellee Kam Chee Khiong, and U Chen Hock, chief executive officer of OSK Investment Bank didn’t immediately reply to phone calls and e-mails seeking comment.

RHB Capital rose 2.2 percent to RM7.29, while OSK climbed 1.7 percent to RM1.77 at the 12:30 p.m. midday break in Kuala Lumpur today. -- Bloomberg



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OSK Securities Thailand gets licence nod from Thai govt

KUALA LUMPUR (Dec 16): OSK Securities (Thailand) Public Co. Ltd (OSKST) has obtained the permanent approval for the foreign business licence from the Thai regulator.

OSK HOLDINGS BHD [] said on Friday the Thai unit had obtained the permanent approval for the foreign business licence from the Ministry of Commerce and the fees were paid on Dec 13.

“The aforesaid licence would enable OSKST to undertake such businesses relating to securities businesses and services as approved by the Ministry of Finance and the Securities and Exchange Commission, Thailand,” it said.

OSKST was formerly known as BFIT Securities Public Co. Ltd, a subsidiary of OSK Investment Bank Bhd.



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RHBCap, OSK to submit merger details to BNM

PETALING JAYA: The merger talks between RHB Capital Bhd (RHB- Cap) and the OSK group seem to be bearing fruit.

Both parties will soon submit to Bank Negara Malaysia (BNM) a detailed proposal on the merger between RHBCap and the investment banking unit of the OSK group, according to sources.

“The parties have been in negotiations and seem to have come to more definite terms on the proposed merger. They are nearing completion of discussions and aim to submit the details of the merger as early as this month,” said a source familiar with the matter.

“The due diligence undertaken by RHBCap for the proposed takeover of OSK Investment Bank is on track and the whole deal is targeted to be finalised by March of next year, if everything goes well,” noted another source.

It is understood that both parties are working on the management structure of the potential merged entity.

RHBCap is believed to be looking at bringing in an “outsider” who is not from either entity to lead the investment banking business of the merged entity.

“The RHB group has also been looking for someone to head its investment banking business after the former head Chay [Wai Leong] left earlier this year,” said a source, adding that the bank has a candidate in mind and may hire the person by the first quarter of next year.

There was earlier speculation that OSK’s founder and major shareholder Ong Leong Huat would lead the new merged investment bank. However, it is learnt that the seasoned investment banker will sit on the board rather than hold an executive position Ong will provide input and strategy on a macro level.

To recap, at end-September, RHBCap announced that it written to BNM for approval to commence negotiations with OSK Investment Bank on a possible merger of businesses.

The central bank gave its approval on Oct 13 and the parties have three months from then to negotiate.

The pricing of the deal is not known. Nonetheless, The Edge weekly reported on Oct 3 that RHBCap is likely to pay between 1.9 times and 2.2 times book value of OSK Investment Bank and it would likely involve a share swap.

While the investing public waits for further details of the proposed merger, the share prices of RHBCap and OSK Holdings have been on an uptrend recently.
RHBCap rose 1.2% yesterday to RM6.94 while OSK Holdings was up 2.31% at RM1.77.

Trading volume of RHBCap went up 76% to 2.3 million shares traded from Tuesday but it is still below the 52-week average daily volume of 2.9 million. OSK’s volume shot up 715% to 10.6 million shares traded from Tuesday, 278% higher than the 52-week average daily trading volume of 2.8 million shares.

The recent pick-up in RHBCap’s stock price reverses a downtrend since June after it hit a 14-year high of RM9.89. The banking counter reversed its upward trend after both Malayan Banking Bhd and CIMB Group Holdings Bhd dropped their plans to acquire RHBCap.

Banking analysts believe that the recent increase in the stock’s price could reflect investor anticipation of further information on the proposed merger as well as to factor in the price of the deal.

“There could be some adjustments in pricing so the deal will not be dilutive for the shareholders of both parties,” said a local banking analyst.


This article appeared in The Edge Financial Daily, December 15, 2011.



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RAM reaffirms RHB Capital’s issue ratings

RAM Ratings has reaffirmed the A1/P1 ratings of RHB Capital Berhad’s RM1.1 billion Commercial Papers/Medium-Term Notes CP/MTN) Programme (2009/2016) and RM150 million CP/MTN Programme 2008/2015).

At the same time, the A1 rating of the Company’s RM350 million Fixed-Rate Bonds (2006/2012) has also been reaffirmed. All the long-term ratings have a stable outlook.

RHB Capital is an investment-holding company that mainly relies on dividend income from its core subsidiary, RHB Bank Berhad; its other key subsidiaries include RHB Investment Bank Berhad, RHB Islamic Bank Berhad, a wholly owned subsidiary of RHB Bank and RHB Insurance Berhad - collectively known as “RHB Capital Group”. RHB Bank, RHB Islamic and RHB Investment carry AA2/Stable/P1 ratings from RAM Ratings.

The ratings reflect the improved profit performance of RHB Capital as a group, as well as the synergistic benefits that have been realised since its transformation into a universal-banking group. The ratings also take into account RHB Capital’s relatively higher gearing and double-leverage ratios as a financial services holding company.

RHB Capital seeks to expand its presence in Asean. The Group is now in negotiations with OSK Investment Bank Berhad and the latter’s holding company, OSK Holdings Berhad as well as OSK Holdings’ major shareholders for the potential merger of their businesses.

OSK Investment's presence in Asean will facilitate RHB Capital’s regional aspirations, which have been rather stagnant since its proposed acquisition of Indonesia’s PT Bank Mestika Dharma had been put on hold pending a regulatory review on the single-shareholding limit of Indonesian banks.

We opine that the merger, if successful, will see RHB Investment’s institutionally focused business being complemented by OSK Investment’s predominantly retail-oriented stockbroking operations and forming the largest domestic stockbroking firm by both trading volume and value. -- Reuters



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RHBCap said may issue stock to pay for OSK

RHB Capital Bhd, Malaysia’s fifth-biggest banking group, may issue stock to pay for OSK Holdings Bhd’s investment bank, three people with knowledge of the matter said.

RHB may issue new shares equivalent to as much as 10 percent of its existing equity to pay for the unit, said the people, who declined to be identified as talks are private. That would value the transaction at up to RM1.63 billion (US$514 million), based on RHB’s market capitalization.

Buying OSK Investment Bank Bhd would allow RHB to overtake CIMB Investment Bank Bhd as the biggest stockbroker in Malaysia, based on data from the country’s exchange. RHB Chief Executive Officer Kellee Kam Chee Khiong last week told local newspaper The Star that he expects to complete the deal by mid-December.

The Kuala Lumpur-based companies said in October they received central bank approval to begin negotiations to combine their investment banking businesses. The approval is valid for three months, they said at the time.

RHB in June broke off separate merger talks with Malayan Banking Bhd and CIMB Group Holdings Bhd, the country’s two largest banks, and said it would focus on expanding on its own. Talks with the two rivals collapsed after Abu Dhabi’s Aabar Investments PJSC bought a stake in RHB at an above-market price, pushing up the price of a takeover. Shares in RHB have dropped 25 percent since June 1.

Mahanum Shariff, head of group corporate communications at OSK Holdings, declined to comment on the transaction. Kam was at a meeting and not immediately available, his secretary said. -- Bloomberg



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Stocks to watch: Harvest Court, CIMB, BHIC, Wah Seong, Prestariang

KUALA LUMPUR (Nov 15): HARVEST COURT INDUSTRIES BHD [] could be in focus on Wednesday, Nov 16 when it resumes trading after Bursa Malaysia Securities declared the securities as designated counters until further notice.

This was the sternest warning to speculators who had chased up the stock in recent weeks as the regulator also issued unusual market activity queries to other penny stocks.

Bursa Securities’ decision to designate the securities of Harvest and the warrants due to excessive speculation observed in the trading of both securities and has been taken in the interest of ensuring a fair and orderly market.

In a separate statement, Harvest Court told Bursa Malaysia that its unit will enter into a related party transaction with 1Green Enviro Sdn Bhd for a RM70 million contract to build a pulp and paper plant in Jempol, Negeri Sembilan.

Other stocks to watch are CIMB Group Holdings Bhd, BOUSTEAD HEAVY INDUSTRIES CORP []oration Bhd (BHIC), WAH SEONG CORPORATION BHD [], Prestariang Bhd, Dutch Lady Milk Industries Bhd, OSK HOLDINGS BHD [] and SOUTHERN STEEL BHD [].

CIMB Group’s net profit rose 10.5pct year-on-year to RM1.012 billion in the third quarter ended Sept 30 from RM916 million a year ago. The net profit for the nine months ended Sept 30, 2011 rose 9.6% year-on-year to a record RM2.898 billion.

Its group chief executive Datuk Seri Nazir Razak said the 3Q earnings were underpinned by the continued improvement at its Malaysian consumer banking operations and rebound in treasury and investments.

Wah Seong Corporation Bhd net profit for the third quarter ended Sept 30, 2011 surged to RM21.29 million from RM12.49 million a year earlier, due mainly to a higher contribution from the oil and gas division.

Its revenue for the quarter rose to RM478.84 million from RM346.76 million in 2010. Earnings per share rose to 2.80 sen from 1.64 sen, while net assets per share was RM1.31.

For the nine months ended Sept 30, Wah Seong’s net profit jumped to RM90.85 million from RM31.21 million in 2010, on the back of revenue RM1.37 billion.

Boustead Heavy Industries Corporation Bhd posted net loss RM2.43 million for the third quarter ended Sept 30, 2011 compared to net profit RM26.9 million a year earlier, due mainly to cost overruns in certain commercial shipbuilding projects.

Its revenue for the quarter fell to RM150.02 million from RM227.71 million in 2010. Loss per share was 0.98 sen compared to earnings per share 10.83 sen a year ago.

For the nine months ended Sept 30, BHIC’s net profit fell to RM9.04 million from RM58.37 million, on the back of revenue RM387.47 million.

Prestariang Bhd posted net profit of RM10.07 million in the third quarter ended Sept 30, 2011, underpinned by its information and communications TECHNOLOGY [] (ICT) training and certification schemes.

Its revenue was RM33.13 million and earnings per share 4.69 sen. It declared an interim single-tier dividend of 4.0 sen per share

Dutch Lady Milk Industries Bhd’s earnings rose 77% to RM23.60 million from RM13.32 million a year ago boosted by lower operating costs, higher sales and favourable sales mix.

It said on Tuesday revenue increased by 9.85% to RM201.71 million from RM183.62 million while earnings per share were 36.87 sen compared with 20.82 sen. It declared a dividend of 35 sen per share.

OSK Holdings Bhd reported a 14.2% decline in net profit to RM28.81 million for the third quarter ended Sept 30, 2011 from RM33.60 million a year ago as it included RM5.63 million allowance for impairment losses on investments.

Its revenue rose 13.1% to RM288.78 million from RM255.35 million and earnings per share were 3.07 sen compared with 3.58 sen.

Southern Steel Bhd posted net profit of RM16.05 million for the first quarter ended Sept 30, 2011 on the back of RM734 million in revenue and expected a satisfactory performance in the current financial year.

Pre-tax profit was RM17.30 million while earnings per share were 3.8 sen and it declared an interim dividend of 5.0 sen per share.



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OSK Holdings 3Q net profit dips 14.2% to RM28.8m

KUALA LUMPUR (Nov 15): OSK HOLDINGS BHD []’s reported a 14.2% decline in net profit to RM28.81 million for the third quarter ended Sept 30, 2011 from RM33.60 million a year ago as it included RM5.63 million allowance for impairment losses on investments.

It said on Tuesday revenue rose 13.1% to RM288.78 million from RM255.35 million and earnings per share were 3.07 sen compared with 3.58 sen.

“The improvement in operating profit was achieved on the back of higher net gains from investment banking activities; loans and deposits growth and Islamic banking operations,” it said.

OSK Holdings added for the nine-month period, its earnings increased 5.2% to RM81.04 million from RM76.98 million in the previous corresponding period while revenue increased at a strong pace of 17.6% to RM835.49 million from RM710.25 million.

“The improvement in revenue was mainly due to higher contribution from investment banking activities and increase in fee income from equities and unit trusts,” it said.

OSK Holdings said Malaysian operations registered an increase in its profit before tax for the nine-month period by 21% to RM113.77 million from RM94.04 million a year ago.

Total profit before tax contribution by foreign subsidiaries amounted to 19% or RM27.34 million versus 33% or RM45.54 million a year ago.




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HDBSVR sees KLCI slipping below 1,475

KUALA LUMPUR (Nov 15): Hwang DBS Vickers Research said on Tuesday the benchmark FBM KLCI could slip below the resistance-turned-support level of 1,475.

It said the weakness in the local market followed an overnight drop on Wall Street where key US equity indices lost between 0.6% and 1.0% as rising Italian bond yields renewed worries that the worst might be far from over for the European sovereign debt crisis.

“Against the bearish backdrop, penny stocks that have jumped significantly of late – like DPS Resources, SYF Resources, Federal Furniture and Emico – are vulnerable to selling pressures. This comes as Bursa Malaysia – after issuing a string of market queries on an increasing number of heavily traded small-cap companies – has declared the shares of Harvest Court as designated securities (when it resumes trading tomorrow),” it said.

HDBSVR said hoping to buck the weak market trend are RHB Capital and OSK Holdings, amid news that their proposed merger is targeted to be finalised by the middle of next month. Separately, banking giant CIMB is scheduled to announce its July-September quarterly earnings later in the evening.



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OSK-RHBCap merger will be top broker

The potential merger of RHB Capital Bhd (RHB Cap) and OSK Investment Bank Bhd's (OSK IB) would create the largest broker in Malaysia which would capture 15 per cent share of market trading value to top CIMB's current lead at 10.4 per cent.

HwangDBS Vickers Research said the merger would enable RHB Cap to tap into OSK’s entrenched retail channel (750 remisiers and dealers) to distribute equity and debt offerings, while grabbing a niche position in the capital markets.

"OSK IB’s growing presence in Indonesia under OSK Nusadana Securities Indonesia with 1-2 per cent market share in equity and debt is also coveted," it said in a statement today.

RHB Cap has yet to have a presence in Indonesia and its proposed acquisition of Bank Mestika is currently on hold, awaiting Bank Indonesia’s finalisation of the single ownership limit rule, the research firm said, adding the merger would provide RHB Cap a good entry platform in the Indonesian capital markets.

HwangDBS also estimated the merger to add 5-6 per cent to RHB Cap's group net profit and reiterated a 'buy' call for RHB Cap with a target price of RM9.60 per share (upside of 25 per cent). --Bernama

RHBCap rise on eurozone, merger hopes

Malaysia’s RHB Capital Bhd shares rose as much as 4.9 per cent on today as investors, buoyed by positive news from developments in the Eurozone, returned to the market.

RHB shares were particularly attractive among financials because it is presently undergoing negotiations with OSK Holdings Bhd to takeover the latter’s brokerage business.

“We are expecting results of the negotiation next month,” a local analyst told Reuters.

“However, the market has mixed reaction about the deal, which we suspect will be priced at between 1.9-2.2 times book value.”

The analyst could not be named as she was not authorised to speak to the media.

RHB shares were up 4.6 per cent to RM7.70 (US$2.461) per share as at 0321 GMT compared to the broader market’s 0.8 per cent rise. - Bernama