Analyst calls for July 2
KUALA LUMPUR, July 2 — This is a selection of morning calls by local research houses for the day.
From RHB Research
Banking – Rated Overweight
System loan growth picked up pace, up 12.5 per cent y-o-y vs. April’s +12.1 per cemt y-o-y. This was the fastest pace of growth thus far this year led by stronger disbursements to the business segment. As such, business loan growth accelerated to 13.4 per cent y-o-y in May but household loan growth sustained an unchanged pace of 11.7 per cent y-o-y.
Credit demand remained healthy with system loan applications up 15.1 per cent y-o-y on the back of higher applications from both businesses and households. System loan approvals also improved, up 18.2 per cent y-o-y to touch a new high of RM42.1 billion, thanks mainly to stronger approvals for loans to businesses. Approvals for loans to households grew by a more modest pace of 6.7 per cent y-o-y.
System-wide gross and net impaired loan ratios declined to 2.44 per cent and1.64 per cent respectively due to lower absolute impaired loans and growth in loan base. Loan loss coverage ratio increased to 93.2 per cent from 91.2 per cent at end-April 2012.
Both ALR and BLR were stable mom at 4.88 per cent and 6.53 per cent respectively. Deposit rates were also broadly stable.
Total system deposits grew 13.1 per cent y-o-y but the slower mom growth in deposits led to the banking system’s LDR rising to 81.3 per cent from 79.6 per cent at end April 2012.
Maintain Overweight stance on the sector with Maybank, Public Bank and CIMB as our top picks.
The relief rally in Asian equities which took off last Friday afternoon after euro zone leaders agreed to relax conditions on loans to financially-troubled European banks – may extend a bit more today. This follows the buoyant Wall Street performance on Friday night, with its key stock indices jumping between 2.2 per cent and 3.0 per cent at the closing bell.
Back home, the benchmark FBM KLCI could make its way to challenge the immediate resistance barrier of 1,610 ahead. On the chart, a breakout from this hurdle will likely push the bellwether towards its next resistance level of 1,635.
To ride on the anticipated marketrun-up, there may be short-term trading interest in laggards such as GentingBhd, MMC Corporation, RHB Capital, Bumi Armada and Parkson Holdings.
From OSK Research
Rechnical analyser: FBM KLCI–Trending Along Uptrend Line
To re-cap, we shifted our view on the FBM KLCI’s near-term technical outlook to firmly bullish after the 12-pt gain recorded on 19 June 2012 violated the 1,582 point-level, which had capped the market’s upside for about 2 weeks. The breakout also violated the short-term downtrend line and wrote off the “Shooting Star” that appeared on 18 June 2012 at the same time. These market actions basically confirm that the market correction actually ended at around the 23.6 per cent Fibonacci retracement line of the Sept 2011 – April 2012 rally.
* These recommendations are solely the opinion of the respective research firms and not endorsed by The Malaysian Insider. The Malaysian Insider shall not be liable for any loss arising from any investment based on any recommendation, forecast or other information contained here.