Highlight Credit Suisse: History suggests Sarawak-linked stocks underperform post state elections

by **Cals** Mon 25 Apr 2016, 18:41

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[size=28]Credit Suisse: History suggests Sarawak-linked stocks underperform post state elections

By Chester Tay / theedgemarkets.com | April 25, 2016 : 11:09 AM MYT

KUALA LUMPUR (April 25): Sarawak-linked stocks would turn out to be underperformers after the state elections, judging from historical data, Credit Suisse Securities (M) Sdn Bhd said.

"Our analysis of the April 16, 2011 and the May 20, 2006 state elections suggests that Sarawak-linked stocks outperform one, three and six months before the state elections, but most underperform thereafter," Credit Suisse said in its research report dated April 19.

The research firm has forecasted that Sarawak Chief Minister Tan Sri Adenan Satem is likely to win big in the May 7 state election and reinforce the state's reputation of being federal government coalition Barisan Nasional's (BN) "fixed deposit".

"Why is Sarawak so important to BN? Although Sarawak's population is only 9% of Malaysia's population, there are 31 parliamentary seats in Sarawak or a disproportionately high 14% of Malaysia's total," Credit Suisse said.

Credit Suisse added that Adenan is well liked across the board by doing and saying the "right" things.

"He has reduced electricity rates, abolished tolls, reintroduced Malay-English in Sarawak's administration and regained Sarawak's autonomy. Adenan has managed to reach out to all races in Sarawak and is willing to speak out allowing the Sarawakian Christians to use the word 'Allah'," Credit Suisse explained.

"He is also negotiating with the federal government for a larger slice of the oil revenue to be poured back into the state economy," it added.

On top of that, the research firm pointed out that the opposition parties in Sarawak are not working together, suggesting split votes.

As in previous state elections in Sarawak, Credit Suisse said the opposition is already at a disadvantage because BN will have more financial resources for campaign, logistical advantages, and rural Sarawakians could be less exposed to international issues and lack Internet access which is the main communication conduit for the opposition.

"Sarawak's population is thinly spread out and logistics is a major hurdle in the rural areas," Credit Suisse said.

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