Investors Should Buy IOI, Maybank on Reduced Risk, Citi Says

By Chan Tien Hin

Aug. 25 (Bloomberg) -- Investors should refocus on ``oversold'' stocks such as IOI Corp. and Malayan Banking Bhd. as political uncertainties subside, Citigroup Inc. said.

Opposition leader Anwar Ibrahim is likely to win a by- election in Penang state tomorrow, which will allow him to return to parliament, a move that may result in fewer demonstrations in the country, Citigroup said in a report today.

``It may not be a bad thing after all for Anwar to return to parliament to make most of his speeches,'' Choong Wai Kee, an analyst at Citigroup said in a report today. This will ``keep him busy that there would be less time for outside activities.''

The Kuala Lumpur Composite Index has slid 16 percent since opposition parties won almost half the states in the March 8 election and denied the ruling coalition a two-thirds majority in parliament for the first time since 1969. Anwar is seeking to oust the ruling coalition before Sept. 16 by convincing enough lawmakers to defect to his opposition alliance.

Prime Minister Abdullah Ahmad Badawi, facing a weakened government, has said he'll transfer power to his deputy Najib Razak after the party's annual meeting in December.

Anwar became eligible in April to run for a parliamentary seat after serving time in jail on corruption charges that he denies.

``Fears of political uncertainty should start to subside,'' Choong said. ``We expect the unusually high equity risk premium to start falling.''

Citigroup said investors should buy plantation, property and banking stocks. Among its top picks are Kuala Lumpur Kepong Bhd., Sime Darby Bhd., Public Bank Bhd., Bumiputra-Commerce Holdings Bhd., SP Setia Bhd. and KLCC Property Holdings Bhd.

The Kuala Lumpur Composite Index fell 0.l percent at 11:31 a.m. local time.

To contact the reporter on this story: Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net