ECM Libra continues to be overweight on the banking sector based on its strong loans growth, sustained growth of non-interest income and slide in credit costs, with its top pick being Maybank followed by CIMB and Public Bank.

Maybank's recent strong quarterly results might finally allay sceptics' concerns over its regional expansion plans and which also stands to benefit from strong credit expansion within South East Asia economies, the investment and research house said in a sectoral review issued today.

'We also like CIMB for its regional as well as its strong non-interest income growth while Public Bank continues to be an investment for its superior earnings, return on assets and asset quality.'

Turning to the automotive sector, ECM Libra said that with economic conditions still buoyant and an improving consumer sentiment, the total industry volume (TIV) is on course to exceed the Malaysian Automotive Association's (MAA) forecast of 550,000 units this year.

According to the MAA, TIV for the first five months of 2010 alone increased 20 per cent year-on-year to 247,000 from 206,000 in the same period last year despite interest rates rising in April and June which saw little impact to auto sales.

'Likewise, we expect the impact from Bank Negara's decision to raise the overnight policy rate (OPR) by 25 basis points to 2.75 per cent last week to have minimal impact on auto sales going forward as well.'

Average sales per month have been stronger in the first five months at 49,000 units compared to 45,000 units in the same period last year.

Assuming average sales for the rest of 2010 is maintained, the industry should see 2010 TIV reach 590,000 units which is an increase of 9.9 per cent from 2009 when TIV stood at 537,000 units, it said.

'We maintain our neutral call on the sector though we acknowledge the likelihood of record auto sales this year is positive for pure auto players such as Tan Chong Motors, Proton and MBM Resources.' -- Bernama