KL shares to fall on US, Maybank in focus

SHARES are set for a weak start today after Wall Street slid on Friday amid worries that the US government will step up its ownership in major banks.
Market heavyweight Maybank are likely to drift lower after the bank announced on Friday a larger-than-expected rights offering worth US$1.62 billion.
US stocks fell and the S&P 500 marked its worst-ever start to a year on Friday, after the government said it will take a large stake in Citigroup’s common shares, fanning fears it will increase its role in other major banks.
Malaysia’s benchmark stock index ended 0.31 per cent higher at 890.67 points on Friday.

“Investor sentiment will remain weak after a slew of negative news,” said an institutional dealer from a bank-backed brokerage.
“The weak fourth-quarter GDP numbers released on Friday suggest that investors should brace themselves for the worst in the first half and Maybank’s rights announcement is expected to spark selling in its shares,” he said.
JP Morgan downgraded Maybank to underweight from neutral with a target price of RM3.80 a share.
“While we recognize that capital raising overhang has been lifted with this announcement, we believe there are significant headwinds ahead for Maybank,” said JP Morgan in a note published yesterday.
The rights offering would result in an estimated 26 per cent dilution to the bank’s earnings per share, said JP Morgan. - Reuters