Credit Suisse: If BN wins big, stocks to watch are CIMB, Genting, IJM…

by **Cals** Thu 11 Apr 2013, 16:04

Credit Suisse: If BN wins big, stocks to watch are CIMB, Genting, IJM…
Business & Markets 2013
Written by Ho Wah Foon of the edgemalaysia.com
Thursday, 11 April 2013 13:44

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KUALA LUMPUR (April 11): Credit Suisse said it sees Barisan Nasional (BN) winning in the coming 13th general election (13th GE) and Datuk Seri Najib Razak staying on as Prime Minister.

“Our base case is for the BN to win and for Najib to keep his job,” said a Malaysian Market Strategy report written by its analyst Tan Ting Min yesterday.

“This will be BN’s closest fight, hence we expect lots of lively debate during the campaigning period,” added the research report dated April 10, 2013.

Due to the tight race seen in the 13th GE, the report listed down the potential winners and losers in the stock market under three possible outcomes:

1) If BN wins convincing, it will be positive for the Malaysian economy as political and economic reforms can be pushed through by Najib.

A relief rally may take place and stocks to watch (with positive inclination) are CIMB, Gamuda, IJM Corp, GENTING BHD [], Genting Malaysia, Bumi Armanda, Tenaga, UEM Land and IJM Land.

2) If BN wins by a slim majority, this could lead to an internal leadership challenge and months of political infighting, thus causing reforms to be derailed and the Economic Transformation Programme to be held back.

And under such a scenario, the stock market may see some buying in low-beta stocks such as REITs, consumer stocks and telcos.

CONSTRUCTION [] (e.g. IJM and Gamuda) and gaming (Genting Bhd and Genting Malaysia) may still see a relief rally, but Tenaga may see slower reforms.

3) If the opposition alliance Pakatan Rakyat wins, there will be political and economic uncertainties until the new PR government clarify their policies. The Budget deficit could worsen if PR increases subsidies and hand-outs.

And obviously, the broad market could see immediate knee-jerk (negative) reactions as “investors dislike uncertainties and change”.

Low-beta stocks may outperform but Tenaga share price may suffer a blow as PR has promised to cut electricity tariff. Monopolies and concessions may also come under review.