Maybank Proposes Dividend Reinvestment Plan

Maybank is proposing to undertake a recurrent and optional dividend reinvestment plan that allows shareholders of Maybank to reinvest their dividend into new ordinary shares of RM1.00 each in Maybank.

In a filing to Bursa Malaysia, the company said the proposed dividend reinvestment plan is part of its efforts to enhance and maximise shareholders' value via the subscription of new Maybank shares where the issue price of a new Maybank share shall be at a discount of not more than 10 per cent to five-day volume weighted average market price.

It said the proposed plan will provide the shareholders with greater flexibility in meeting their investment objectives, as they would have the choice of receiving cash or reinvesting in the company through subscription of additional Maybank shares without having to incur material transaction or other related costs.

The company will also benefit from the participation by shareholders in the proposed dividend reinvestment plan to the extent that if the shareholders elect to reinvest the electable portion into new Maybank shares, the cash which would otherwise be payable by way of dividend will be retained to fund the continuing growth and expansion of Maybank and its subsidiaries.

The retention of cash and the issue of Maybank shares under the proposed plan will not only enlarge the company's share capital base and strengthen its capital position, but will also add liquidity of Maybank shares on the Main Market of Bursa Malaysia.

The proposed dividend reinvestment plan is expected to be put in place by the second quarter of 2010.

RBS: Buy ringgit against won, yen

The bank recommends entering a three-month forward contract to sell the won at 339.36 per ringgit and the yen at 26.74 per ringgit

SINGAPORE: Investors should buy the ringgit against South Korea's won and Japan's yen as Malaysia's central bank may increase its policy rate as many as two more times in 2010, the Royal Bank of Scotland Group plc said.

Bank Negara Malaysia will continue reining in monetary stimulus after last week's rate increase, while government pressure will mean that the Korean and the Japanese central banks won't increase borrowing costs anytime soon, RBS, the fourth-largest currency trader, wrote in a research note published on Tuesday.

Malaysia's central bank will next review its policy on May 13.

"Bank Negara could do a few more rate hikes," RBS strategist Chia Woon Khien said in an interview in Singapore yesterday. "The question is whether they want to go straight to neutral level or stay a little dovish along the way."

Malaysia's central bank raised its benchmark overnight rate by 25 basis points to 2.25 per cent on March 4. The RBS report said there is "scope for at least one, if not two more, 25-basis point hikes" in the coming year. Prime Minister Datuk Seri Najib Razak said last week that Southeast Asia's third-largest economy may expand 6 per cent this year, twice the pace of the official forecast, on a rebound in exports.

The ringgit has risen 2.6 per cent this year against the dollar, the best performer among Asia's most active currencies excluding the yen. It climbed 0.6 per cent to 3.3230 at 12.10pm in Kuala Lumpur, the strongest level since August 2008.

The bank recommended entering a three-month forward contract to sell the won at 339.36 per ringgit, targeting the spot rate to reach 355 when the bet expires on June 9. RBS also suggested a similar forward bet at 26.74 yen per ringgit, predicting the spot rate at 28 upon the contract's maturity.

Will Malaysia rate rise set off SE Asia hikes?

Analysts say Malaysia’s regional neighbours will focus on domestic factors to determine when to raise interest rates

Central banks in Southeast Asia are set to stick to their current monetary policy course rather than change tack after Malaysia last week surprised markets by raising interest rates.

The Malaysian central bank increased its rate to 2.25 per cent from a record low of 2 per cent, arguing the move would help avoid the risk of economic imbalances later on.

Analysts say Malaysia’s regional neighbours will focus on domestic factors to determine when to raise interest rates for the first time following the global economic crisis.

Thailand’s central bank left its policy rate unchanged on Wednesday, saying Malaysia was one factor among many for policymakers to consider. The Philippines central bank meets on Thursday and is expected to leave rates steady as well.

Malaysia last week became the first central bank in Asia outside Australia to increase rates as part of efforts to unwind crisis measures.

ANALYST VIEWS

(The comments were made before Thailand’s rate decision)

DAVID COHEN, ECONOMIST, ACTION ECONOMICS IN SINGAPORE:

“I don’t think that they will be prompted to tighten in meetings this week in Thailand, or Philippines. It’s certainly got their attention, the fact that people in the market are talking about it. Maybe it helped to test the waters for these folks and I think it’s consistent with the mainstream expectation that sometime in mid-year, they will tighten rates.

They can start using the same rationale as Malaysia’s central bank governor - the normalisation after an extended period of accommodative rates.”

PRAKRITI SOFAT, REGIONAL ECONOMIST, BARCLAYS IN SINGAPORE “No, I think each country has its own set of factors that are driving what they will do. Indonesia may begin its tightening cycle in late Q2, we see 100 basis points for the year but risks are biased to later and lesser. But based on BNM (Malaysia) they won’t be changing their rate outlook.”

FREDERIC NEUMANN, REGIONAL ECONOMIST, HSBC IN HONG KONG: “For the Philippines, I doubt it (Malaysia’s action) has had any major impact, in part because economic data has been far softer in Philippines compared to Thailand and Malaysia.

For that reason, no imminent move by the BSP (Philippines) and the BSP might even hold through the second quarter. There is some tinkering at the edges to remove the emergency measures put in place, but that has to be distinguished from outright rate hike as seen in Malaysia.”

NUCHJARIN PANARODE, ECONOMIST, CAPITAL NOMURA IN THAILAND: “Our house has already expected other central banks in the region to start raising rates in the second quarter as rates are too low, not because of Malaysia’s rate rise. But that may increase the likelihood of rate hikes elsewhere.”

VISHNU VARATHAN, ECONOMIST, FORECAST PTE IN SINGAPORE:
“On the radar now is India. If you’re talking of countries that probably need to normalise, we have a whole list of them.

But given the mix of inflation data as well as growth pick up , conditions are appropriate and most pressing in India. China is also not too far off.”

USARA WILAIPICH, ECONOMIST, STANDARD CHARTERED IN THAILAND: “The impact is limited given implementation by central banks in any country will more depend on specific local factors, mainly on speed of economic recovery, inflation pressures, and any evidence of asset price bubbles.”

Khazanah said placing out 7.7pc of MAHB

MALAYSIA'S state fund Khazanah Nasional Bhd is placing out 7.7 per cent of Malaysia Airports Holdings Bhd (MAHB), sources familiar with the matter said yesterday.

This follows a similar exercise in September last year when it sold a 5 per cent stake in the airport operator as part of its programme to reduce its holdings in government-linked firms.

The new placement of 85 million shares, via a bookbuilding process, is aimed at raising as much as RM400 million, according to a term sheet obtained by Reuters yesterday.

Prior to the current placement, Khazanah had a 67.7 per cent stake in MAHB.

CIMB and JPMorgan are joint bookrunners in the placement exercise, the term sheet showed.

The state fund in December sold 2 per cent of key power utility Tenaga Nasional in a bid to woo foreign funds back into Malaysia's stock market.

MAHB shares closed at RM4.90 yesterday.

KL bourse set to test 1,308-point level

It is critical that the benchmark index (FBM KLCI) surpasses the 1,308 level, as it will reflect confidence in the market and economy, says a research head

The Malaysian stock market is expected to continue on the uptrend this week, helped by growing confidence in the domestic economy and in the case of banking stocks, by last week's decision by Bank Negara Malaysia to raise interest rates slightly.

Analysts said the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index may breach the year's high of 1,308 level.

"I think the market is set for a strong rebound and it will test the 1,308-mark," said Jupiter Securities head of research Pong Teng Siew.

He added that

"The GDP (gross domestic product) figures announced recently signal that Malaysia's growth is strong," he said.

The benchmark index reached the high of this year at 1,308.36 on January 21.

Analysts also believe that banking stocks are likely to continue to rise, backed by the recent interest rate increase which will translate into higher interest margins for banks.

The market ended sharply higher last Friday with the FBM KLCI rising 15.69 points, or over 1 per cent, to 1,299.78, its highest level in seven weeks. Banking stocks were the best performers.

Public Bank Bhd aims to match dividend payout

Public Bank Bhd (1295) aims to keep paying half of its net profit as dividend this year despite concerns that stricter global rules may require banks to keep more shareholders money in future.

"Our cash payout ratio last year was about 57 per cent. We are looking to try and maintain that level, at around 50 per cent," chief operating officer Leong Kwok Nyem told reporters after its annual shareholders' meeting in Kuala Lumpur yesterday.

He added that the dividend plan is subject to Bank Negara Malaysia's approval and any new developments in the Basel 3 framework, which is still under discussions globally.

The new global rules may require banks to hold more shareholders fund.

Still, the total dividend payout may be lower this year in terms of percentage, as it also gave out treasury shares in the past two years.
The country's third largest lender last year paid a gross cash dividend of 55 sen per share, and a share dividend that equals to 22.2 sen based on its share price at the end of the year. This brought the total dividend payout to 79.3 per cent of its net profit in 2009.

The bank, which distributed 146 million treasury shares in the past two years, is left with 29 million treasury shares. It could return this to shareholders this year to boost dividend, but the number is quite small, Leong said.

"We will look at the appropriate level of dividends for the current year," he said.

Leong said the bank has no plans to raise new capital this year, saying that it is premature to prepare for stricter capital rules under Basel 3, which is still in the early stages of discussion.

Banks are only required to provide feedback to the Basel committee by April this year and there will be further rounds of consultation by the committee before the next draft of the proposal is expected by the year-end. The new rules will not come into effect until end-2012.