Sunday, 30 December 2012

The General Election 13 Factor

I read with interest of an article published by theStar today. Speaking to six fund managers on what's in store for us in 2013, I have decided to summarized the key points of the article for readers. Never the less, if you would like to read the full story, click HERE.

Danny Wong, Areca Capital (CEO)

If the global economic outlook continues to improve and the regional markets sustain or keep the bullish tr end, I believe that Malaysian equities will become “the star”, provided there is no major surprises from the GE.

China's focus may be shifted to economic policy action and stimulus to ensure its GDP for the next decade doubles (or grows at a yearly rate higher than 7% over the next 10 years).

My major concerns for 2013 are an unfavourable GE outcome (such as a smaller majority government), a full-blown EU crisis and high inflationary pressures caused by governments' “spending” or excessive quantitative easing.

I prefer large-cap defensive high-yield stocks until the GE is over and I will allocate some money for cash/short-term fixed income for opportunity.

I would pick up index-linked stocks whose prices slump during this period. When the certainty of the GE becomes clearer, I would switch to high-growth stocks, in particular higher beta names.

In general, my top three sectors are banking, plantation and telcos and mid-smallcaps names like Can-One BhdKumpulan Fima Bhd and Hartalega Holdings Bhd.

Thomas Yong, Fotress Capital Asset Management (M) Sdn. Bhd., (CEO)

Main uncertainty in the near term is the timing and concerns over the outcome of the GE

Observations from recent releases of economic data from the US and China indicate an improving external environment.

Barring any unforeseen circumstances, the Asian economies and equity markets are likely to fare better in 2013

We have maintained minimum exposure to the Malaysia market, and this posture will be kept until after the GE

we prefer stocks that will benefit from an improving external environment and avoid stocks exposed to government policy changes risk, such as subsidies, etc. In the early part of the year, our client portfolios will continue to posture towards the positive re-rating in Chinese and Hong Kong equities.

Tan Teng Boo, Capital Dynamic Asset Management Sdn. Bhd., (Managing Director)

Globally, in contrast to the consensus view, Capital Dynamics is optimistic. Locally, in contrast to the popularly held view, it is timid.

Geoffrey Ng, Hong Leong Asset Management Berhad, (CEO)

The Malaysian market faces a large political- risk-driven event during the early part of 2013 with the impending GE. Investor sentiment will remain guarded during this time.

Our strategy going into 2013 is to remain defensive and with a fairly high cash allocation.

We, however, will hold conservative exposure to cyclical growth sectors such as oil & gas and construction, two primary beneficiaries of the continued ETP-led pump-priming programmes by the Government.

Chan Ken Yew, Kenanga Investment Bank Bhd (Research Head)

The long-awaited 13th GE has somewhat overshadowed market sentiment. This can be seen from the declining FBM Small Cap Index. The small-cap index has been trending down to 11,425.02 from its two-year high of 13,356.97 on Dec 13, 2012.

The weaknesses of the global economy could spill over into the first half of 2013 as the resolution for the Eurozone debt crisis remains uncertain. However, with a high probability that the US fiscal cliff would be resolved, and further signs of improvement in the US economy as reflected mainly in the housing and manufacturing sectors, we believe the global economy will have a fair chance to stabilise.

Furthermore, China's main economic indicators also showed steady improvement during the second half of 2012, which confirms that it is nearing the end of its two-year down cycle. 

We prefer to adopt a trading stance - Buying-on-Weakness' below 1,610 and Selling-on-Strength' above 1,710 in a rangebound market environment. 

We also reckon that consistent performer, defensive and high-yield stocks will still be the mainstream investment choices. 

As for sector selection, we are generally bullish on Banking, Non-Bank Financials, Oil & Gas and Power Utilities.

We are also optimistic on Consumer F&B as we believe that value has emerged following the recent price corrections here.

Mark Mobius, Templeton Emerging Markets Group, (Executive Chairman)

Two particular investment themes stand out to us: consumers and commodities.
The consumer theme arises from consumers in many emerging markets becoming increasingly wealthy while macroeconomic policy has increasingly been aimed at moving from export-based models toward ones fueled by domestic demand

The commodity theme reflects our expectation for strong growth in demand for hard and soft commodities as many emerging markets industrialise, likely grow wealthier and increase spending on infrastructure, which tends to tilt the balance between supply and demand for such products in favor of producers.

Overall View
It seems that all six of the Fund Management Companies above are concern about the upcoming GE. For me, the outcome of the election seems to be pretty bleak for the current ruling party as hinted by many of the fund managers above.

I'll probably be looking for Unit Trust that invest in China as the economy there is slowly recovering. Also I intend to sell some of my non performing shares in preparation for GE13. Gold is also another investment avenue which I am considering to increase my investment in. The price of Gold has dropped recently and I believe it is a good time to buy now.

Cheers and we look forward to 2013

Happy Investing everyone

MY Investor

No comments:

Post a Comment