Kenanga/ECM ... May 09

The government has relaxed the foreign equity conditions for investment banks and insurers in Malaysia.

The standalone IBs in Malaysia are ECM and Kenanga. At present, the IBs are allowed 49% foreign shareholdings. But to date, there have been no takers. With the liberalization of the financial sector allowing foreign equity of 70% in IBs, will there be any takers?

However, if they are offers, not all shareholders of IBs would sell. Among the IBs, OSK, Hwang DBS have strong balance sheet and can hold their own. MIDF was owned was taken private by PNB.

This leaves only ECM and Kenanga.

ECM major shareholders are Equty Vision Sdn Bhd with a 15.64% stake, Lim Kian Onn (9.34%) and Hikkaya Jayas Sdn Bhd (5.94%).

In Kenanga, CMS Capital Sdn Bhd is the largest shareholder with a 25.07% stake, followed by Deutsche Asia Pacific Holdings Pte Ltd (16.55%), Syed Yusof (8.17%) and Tengku Noor (7.17%).

ECM and Kenanga are the best possible turnaround plays with the changes in the industry. This is despite their weaker performance when compared to OSK.