KUALA LUMPUR: Investment bankers and market strategies concurred at a forum organised by Bursa Malaysia Bhd that oil and gas (O&G), plantations, rubber gloves and banks are appealing sectors for investments with the second-half of 2014 expected to be better.

"The Malaysian banking sector is undervalued and should be overweighed. The asset quality within the sector is good and Bank Negara Malaysia is doing a great job in regulating the banks," said RHB Investment Bank Bhd head of research Alexander Chia Hock Lon who is a panellist.

The other panellists of the forum titled "Building Resilience & Sustainable Growth" were Kenanga Investment Bank Bhd economist Wan Suhaimie Wan Mohd Saidi and Jupiter Securities Sdn Bhd chief market strategist Benny Lee. "The low exchange rate between ringgit and US dollar bodes well for the plantation sector as it makes it cheaper to buy palm oil compared with other cooking oil," said Chia.

O&G stocks are liked by investors as these companies are beneficiary of Petroliam Nasional Bhd's many contract awards in addition to contracts awarded by other O&G companies, local and foreign. In the case of drilling company UMW Oil & Gas Corp Bhd, its share price appreciated to RM4.19 from its offer price of RM2.80 and opening price of RM3, barely three months after listing. "We have made 50% return for our investors in three months of listing," said president Rohaizad Darus. Rohaizad said the company's position as a purely local drilling company presents various opportunities given the fact marginal fields will be developed in the future, thereby needing drilling services. UMW Oil & Gas plans to solidify its Malaysian market leadership position before expanding into the Asia-Pacific region where it intends to purchase some assets.

"We have about RM1 billion left from our initial public offering proceed to be used to buy assets," said Rohaizad. Later, during his presentation, Malaysia Building Society Bhd (MBSB) president/CEO Ahmad Zaini Othman said his company is looking at palm oil plantation financing as one of the new products that needs to be developed. Ahmad Zaini said the personal financing market which is one of MBSB's main source of revenue, is shrinking due to stringent qualification, driving the company to look for other avenues to increase revenue and profit.

Lastly, rubber glove maker Kossan Rubber Industries Bhd hinted that it may pay higher dividend in the future, driven by improving free cashflow and declining net gearing. "We have no fixed dividend policy," said corporate affairs and business development GM Edward Yip, adding that the company has strong cash inflow from operations, enough to fund capital expenditure requirement, amounting from RM70 million to RM90 million annually.

The inaugural regional media conference organised by Bursa Malaysia aims to bring awareness to the public of the 910 companies, in 50 sectors that are listed. "This platform is something we have to do," said Bursa Malaysia CEO Tajuddin Atan. According to Bursa Malaysia statistics, KLCI companies generate 45% of their revenue overseas in 2012, showing that Malaysian companies are getting multinational.

By Azli Jamil

The post The sectors to invest in appeared first on Asean Investment | Marc Djandji Blog.