Banking - overweight by OSK
As the economic recovery takes hold amid an environment of near record low interest rates and ample liquidity, we believe that the positive earnings momentum is likely to extend well into 2010 on strong loans growth and capital market fund raising activities. We maintain OVERWEIGHT on the sector on the grounds that NPLs are likely to be benign while the downtrend in provisions and strong capitalisation provide future earnings and capital management upside surprises, which have yet to be fully reflected in banks’ valuations. Our top sector big cap picks are CIMB (BUY, TP:14.90) and Public Bank (BUY, TP: 11.80), and mid-caps such as AMMB (BUY TP: RM5.35) and EON Capital (BUY, TP: RM6.60)
