#Stocks to watch:* Plantations, Axiata, glove makers, K-One

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KUALA LUMPUR: Investors and Malaysians at large view the new Cabinet line-up as positive, even though there are still headwinds ahead for the economy, especially from external factors. “Fundamentally there is no impact to the economy but people are positive to the changes,” said Chris Eng, associate director as OSK Investment Research. The market would continue to be driven by US factors, he said, adding “this is still a bear market rally and selling pressure could pick up the later part of April”. “The global economy is still not out of the woods. In terms of recovery, Malaysia will lag behind China and the US. For this year, we see the Malaysian economy bottoming in the second quarter, staying flat towards end-2008 and a recovery in the first quarter of next year,” he said. Of concern would be the weaker industrial production index over the first two months of this year and economists expect a recession in the first half of this year. The market on April 10 could see some profit taking on stocks which had run up the previous day, especially ahead of the weekend and a trade-shorten week for US equities due to Good Friday. Plantations would continue to generate strong interest, with the third month crude palm oil futures rallying to a six-month high of RM2,267, AmResearch said it was raising its average CPO price assumption by 25% to RM2,500 per tonne for 2009 from RM2,000 tonne. “For 2010, our average CPO price assumption is now RM2,700 per tonne against RM2,300 per tonne previously. Although CPO prices have risen 32% year-to-date, we believe that the CPO pricing upcycle would be sustained,” it said. Aside from plantations, other counters which would see trading interest are Axiata Group, AirAsia, glove makers, LPI and K-One Technology. Axiata’s unit Celcom (Malaysia) Bhd has said it did not experience any sign of "weakening" in the first quarter and would have campaigns to keep up its growth momentum this year. Celcom said 1Q had always been a weak quarter for telcos, but on a year-on-year comparison, there has been no sign of weakening in the 1Q results. AirAsia Bhd said its passenger growth would be intact this year, despite the global recession significantly impacting the aviation industry. AirAsia chief executive officer Datuk Seri Tony Fernandes said the low-cost carrier was optimistic that it would still capture passenger growth via its expanding route network and competitive fares. Glove makers, which had been recession proof, like Top Glove and Kossan would continue to see trading interest. K-One Technology will ink a partnership agreement with US-based Livescribe Inc. next week to develop and manufacture the Livescribe smartpen product line.  “This collaboration is expected to boost the K-One Group’s prospects amid the current economic downturn. The partnership agreement represents yet another milestone for the K-One Group as it takes a leap forward in its position as a leading technology group capable of producing world-class products at competitive prices,” according to K-One.  OSK Research maintains its buy recommendation on LPI Capital at RM9.10 and said despite the challenging macroeconomic outlook and hence potential risk of higher claims and reinsurance cost coupled with a slowdown in gross premium growth, LPI’s superior and prudent underwriting practices would help to mitigate any risk of a spike in claims ratio as the economic downturn spreads. Ingress Corporation is unable to comply with the requirement under the transaction documents of the Sukuk that it deposits 50% (or RM25 million) of the sukuk first principal repayment of RM50 million, due on 6 July 2009 latest by April 9.