Monday, January 28, 2013

Stocks For Post Elections - The Flip Side

Starbiz daringly came up with 8 stocks for those who think that the government will stay in power. The reasoning being, you may see volatility or weakness in stocks as the polling date draws nearer. They are of the view that IF you think BN stays in power, the following stocks may be "collected on weakness"

They include: Sapura Kencana, MMHE, Handal Resources, Cypark Resources, Prestariang, MYEG, CIMB and Gamuda.

My question is: Does that mean that if the opposition wins, the above 8 stocks will be hammered? Well, I think so. You cannot have your cake and eat it at the same time. The very ingredients that the writers relied upon in assessing the stocks as to why they are in favour, will also work against them if the flip side occurs.

Somehow, nobody seemed to be focused on what stocks to buy and sell should the opposition wins. Here are my selections:


1) TENAGA - Obviously, they have been "forced" to leak profits to IPPs. Can safely say that there will be a lot of mutual reviews and  renegotiations, and maybe cancellation when the due date comes up for some IPPs. All will be in favour of Tenaga.

2) Some Banks - If CIMB is a sell, then a more level playing field will favour the ones in 2nd-4th place in IB.

COULD BE SELLS - These are predicated on supposed changes in the competitive landscape for the major industries which will not favour the current crop of industry leaders. Industries most affected should be oil & gas, autos,  toll concessionaires

1) Sapura Kencana
2) DRB Hicom
3) MMC
4) Litrak
6) Gamuda

Industry Developments

PLANTATIONS Companies - Not many are aware that there are still a number of layers involved for CPO companies when they want to export their products. I assume these layers will be dismantled. However, more rules could be implemented to ensure sustainable agriculture and to meet global best practices. Neutral.

AUTOS - Proton cars are usually around 50% cheaper overseas. Enough said.

MONOPOLIES & FIEFDOMS - Industry which currently are monopolies could be unshackled, such as flour and rice. The water concessionaires are not making our lives easier. Read between the lines.

BIG GOVERNMENT TO BE DOWNSIZED - Industries which are currently very much dominated by GLCs or government presence will be downsized as it is highly ineffective and unreasonable to have such high government presence at the expense of the private sectors. Sectors currently with very high government presence include Utilities (90%), Transportation & Warehousing (80%) and Agriculture, Banking, Communications (more than 60%).

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