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

Analysts pick sectors likely to do well going forward

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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 Bhd, Malayan 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 Ng
said 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 Razak
said 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.”