KUALA LUMPUR: Key regional markets will tread cautiously on Friday, Feb 19 with downside bias after the U.S. Federal Reserve raised the discount rate it charges banks for emergency loans, spurring a fall in U.S. stock index futures.

The Fed said the discount rate would be increased to 0.75% from 0.50%, effective Friday, but left its benchmark interest rate unchanged near zero.

After a good start to the year of the Tiger, regional markets swung into the red on Thursday as investors started to grow cautious amid release of fickle global economic data.

Stocks to watch on Bursa Malaysia are Homeritz Corp,  Tanjung Offshore, Dutch Lady Milk Industries Bhd, EON Capital Bhd, Alliance Financial Group Bhd and KNM Group Bhd.

Homeritz will be listed on Friday. It is Malaysia’s leading upholstered home furniture manufacturer with 99% of revenue derived from exports to more than 40 countries.

According to HwangDBS Vickers Research, it is expanding capacity to leverage on rising demand, especially from Europe and US markets.

"Fair value of 77 sen, based on PE multiple of 7 times on CY10 earnings. Downside risk is cushioned by a prospective net dividend yield of 6.9%. Offer price 65 sen, fair value 77 sen," it said.

Tanjung Offshore's share price could be buoyed by positive news flow on contract awards since January. Its UK unit recently clinched a RM26.55 million job, bringing the value of contracts secured year to date to some RM270 million. The counter ended two sen higher at RM1.07 yesterday.

Investors might react positively to Dutch Lady Milk Industries Bhd’s recent declaration of net final dividends of 12.5 sen per share and improved net profit for year ended Dec 31, 2009.

EON Capital is unlikely to see an end to its boardroom tussle at the extraordinary general meeting (EGM) on Monday to seek shareholders' approval for the appointment of eight new directors, as certain shareholders may dispute some terms set in the EGM notice.

The board of directors of Alliance Bank Malaysia Bhd may have made a decision on the clarification given by its group CEO Datuk Bridget Lai, sources said.

Despite KNM Group Bhd managing director Lee Swee Eng's proposal to buy up the company at 90 sen per share, investors seemed to have shown disinterest in the proposed takeover as they await the due diligence due on March 22.

Petra Energy Bhd has appointed two executive directors to its board, which has Tengku Datuk Ibrahim Petra as its executive chairman.

Investors might also want to see whether Genting Bhd would extend its losses after its shares fell 15 sen or 2% to RM6.54 yesterday. Genting’s share price was affected by the fall in its 52%-subsidiary Genting Singapore Plc shares.

Mycron Steel Bhd shares might see some movement after a report that said Japanese steel manufacturer JFE Steel Corp may raise its stake in the a steel products maker.

JFE Steel recently acquired a 3% interest in Mycron, according to the report. Mycron shares closed 1 sen lower at 54 sen yesterday.