Tuesday, May 07, 2013

Which Stocks Will Go Up Now?

Which stocks will go up now that the general election is over?

PETALING JAYA: The conclusion of the 13th general election (GE13) with Barisan Nasional returning to power has removed the political risk overhang that had been affecting market sentiment, said analysts.
The stock market rallied to reach a fresh record high of 1,826 points, as investors and traders returned to the market in full force.
Blue chips like CIMB Group Holdings BhdMalayan Banking Bhd,Tenaga Nasional Bhd and Genting Bhd shot up to multi-week highs, pushing the benchmark FTSE Bursa Malaysia KL Composite Index (FBM KLCI) to close at 1,752, up 3.38%.
Research analysts also singled out sectors such as banking, construction, oil and gas, and media as likely to do well, going forward. This was based not only on the removal of the election risk but also as a result of forecast stronger consumer confidence and discretionary spending.
Hwang Investment Management Bhd chief investment officer David Ngsaid Hwang, which had been gradually buying Malaysian equities since the end of February, would add on equity weight in sectors that would do well post-GE13 such as those involved in the continuation of nation building and economic development.
In the banking sector, for example, analysts noted that in recent months, investment spending decisions by businesses had been put on hold as shown by recent banking statistics. RHB Research in a report noted that in February, business loan growth had slowed down to 8.7% year-on-year (y-o-y) from the 14.4% growth y-o-y registered in July 2012. The research house, however, expects loan demand from the business segment to pick up, and this would be positive for the banks. It noted that banking stocks, which have lagged regional peers in terms of share price performance, up 3.7% year-to-date, are poised to play catch-up.
Alliance Research banking analyst Cheah King Yoong believes that post-GE13, CIMB serves as the best proxy to capitalise on the expected relief rally, as the external risks and domestic political uncertainties subside.
And with concerns of cancellations or delays in the rollout of some big-ticket projects under the Economic Transformation Programme (ETP) removed, analysts said the construction sector was poised for a re-rating. Gamuda Bhd stood out as one of the biggest beneficiaries, said analysts.
RHB Research has upgraded the property sector to “overweight”, saying that with the GE13 results, sentiment is likely to buoy the high-beta property sector.
“Our upgrade is also supported by solid sector fundamentals, which include an uptick in population growth cycle, an influx of liquidity and consistent gross domestic product growth. Other catalytic developments are also substantial enough to boost property demand and prices in the related areas,” said RHB Research.
Meanwhile, CIMB Group chief executive officer Datuk Seri Nazir Razaksaid in a statement: “We would like to congratulate Barisan Nasional on winning GE13. The financial markets equities, bonds and currency have reacted very positively to the results, reflecting international investor confidence in BN's economic management and relief, as the long period of political uncertainty for Malaysia comes to an end. We look forward to, among others, the continued progression of the ETP agenda, including the gradual introduction of the New Economic Model. The rakyat has delivered some very important messages at the polls, so we anticipate that the new BN Government would enhance its emphasis on areas such as combating corruption, domestic security, education and improving the quality of life of the urban poor.”
Alliance Research chief economist Manokaran Mottain said the BN win at the very least means policy continuity for the ETP and the Government Transformation Programme.
However, he said there were several urban issues which needed attention, including the rising cost of living, affordable housing, urban poverty and transparency in Government policy.
Manokaran also said that any subsidy rationalisation would be easier to implement should leakages be addressed.
Fitch Ratings' Andrew Colquhoun, head of Asia-Pacific sovereigns, said this on Malaysia's election result: “Fitch looks forward to greater clarity on the Government's fiscal and economic policy programme following Sunday's election. The agency had previously highlighted that rising public debt ratios particularly when off-budget borrowing is taken into account and delayed structural fiscal reform to subsidy programmes and to lessen revenue dependence on the oil sector may eventually exert negative pressure on the ratings.”

--TheStar