KUALA LUMPUR, Nov 5 — Malaysia’s main stock index fell today but top oil palm planter Sime Darby and sixth-ranked lender Hong Leong Bank were higher on merger and acquisition talk.

By the midday break, the FTSE Bursa Malaysia KLCI was down 0.08 per cent.

Sime Darby, the largest stock on the bourse with a market capitalisation of US$16 billion (RM54.5 billion), gained 0.8 per cent.

With China’s President Hu Jintao visiting Malaysia next week, speculation is swirling the Malaysian government may finally seal a deal to sell 10 per cent of Sime Darby to a Chinese group.

A strategic partnership with a Chinese group would be “neutral to slightly positive” for Sime Darby, the world’s biggest planter by land ownership, said CIMB Research in a client note today.

China is Malaysia’s main market for refined palm products, importing about 300,000 to 400,000 tonnes of refined palm olein a month.

“Sime Darby wants to build up more potential customers in China, and it would be much easier to achieve that if you have a local partner,” said a Kuala Lumpur-based palm oil trader.

Hong Leong Bank rose 1.3 per cent. Recent media reports said the bank may pay special dividends to shareholders and that it may be eyeing a stake in Public Bank, Malaysia’s third-biggest lender by assets.

Public Bank was unchanged at RM10.80. — Reuters