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Saturday, May 26, 2012

Think Outsyed The Box !!

Investment Analyst's View GE13

 I received this in the mail.  I have truncated it and edited a few words. This is what some Investment Analysts are predicting. Note the words in red.
There is a disclaimer - "J.P. M***an does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision."
The upcoming 13th General Elections (June/Sept possible) is the key market risk
We have embarked on a joint-research with C****E, which provides independent research and analysis on political issues. Stay cautious pre elections, stick to apolitical names with growth/dividends.
C****E’s key conclusion: BN (ruling alliance) should win about 137 parliamentary seats, +/- 5%, a majority of between 58-64%.
Non-consensus views include:-
1) PM Najib will not be challenged from within so long as UMNO retains more than 78 seats
2) Malay middle ground voters have swung in favour of BN, more so after Bersih 3.0 rally
3) market is concerned with the 2.3MM new registered voters who may vote against BN, but most of the new voters are registered in Johor, Selangor and Perak, where seats are already lost to the Opposition, where
4) More votes do not necessarily mean more seats for ... PR (opposition alliance).
Positive scenarios: C****E outlines five scenarios, J.P. Mo**an analyses market impact.
 Scenario A (BN wins 61% of seats, status quo),
2. Scenario B (BN wins >61% but short of a two thirds majority),
3. Scenario C (BN wins two thirds majority); all suggest policy continuity and an expected short term relief rally (big rally for outcome C). Sectors that benefit the most longer-term should include: Construction and Oil & Gas directly, and Banks,  Property and Media indirectly. Top picks in these sectors include: IJM, Dialog, CIMB, IJM Land and Media Prima.
4. Neutral / negative scenarios: Scenario D (BN wins 50-61%). Negative for market if <55%. 
55% to 61% (provided PM Najib is not challenged from within) neutral for market given policy continuity, hence similar picks as  above.    Scenario D (PR wins): Sell and stay away, potential policy changes breed uncertainty. 
Most impacted sectors :  construction, property, transportation, gaming and stocks with perceived government linkages.
Key stocks affected include: Tenaga, YTL Power, MMC, Gamuda, IJM, WCT, MRCB.

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