KUALA LUMPUR (Jan 21): Axiata Group Bhd and CIMB Group Holdings Bhd were among the top decliners on Monday afternoon as election jitters prompted foreign shareholders to reduce exposure in the telecommunication and financial-services entities, according to analysts.
At 3.51pm, Axiata, one of the most active stocks, was trading at RM6.31, with 27 million shares done, after declining as much as 51 sen or 8% to RM6.13 earlier. CIMB, changing hands at RM7.23 at 3.53pm, with 15 million shares traded, had fallen as much as 43 sen or 6% earlier to RM7.15.
Analysts said the decline seen by Axiata and CIMB, which was higher than the FBM KLCI’s 2% fall, was due to the stocks' high foreign-shareholding composition. "It is a function of the shareholding structure in Axiata," an analyst told theedgemalaysia.com over the telephone.
According to dealers, the broader market’s sell-off comes against a backdrop of anticipation that the government might dissolve parliament soon to make way for the general election. "There is a rumour that parliament will be dissolved soon," a dealer said.
In a note on Jan 17, OSK Research Sdn Bhd analyst Jeffrey Tan said the research firm was maintaining its "neutral" call on Axiata with a fair value of RM7.02. Tan said the stock’s existing "record-high foreign shareholding of 29% carries the most downside risk" should there be a change in Malaysia’s risk profile as well as the highly anticipated sell-down by investors following the upcoming general election.
"Meanwhile, the potential share price re-rating catalysts are stronger than expected earnings and special dividends," Tan added.
On CIMB, Alliance Research Sdn Bhd analyst Cheah King Yoong wrote in a report on Jan 21 that the stock’s performance could be hurt by its high foreign shareholding of 40.9% as at December 2012. Cheah said CIMB was "highly vulnerable to increased market-risk premium " especially with the nearing of the 13th general election.
"Therefore, even though we continue to like CIMB’s management track record, strong banking franchise and good proxy to ASEAN exposure, we believe its current share price offers limited upside in the near term," Cheah said.
Alliance is maintaining its "neutral" call and target price of RM7.81 for CIMB.