KUALA LUMPUR (April 9): CIMB IB Research expects the local stock market to remain volatile during the campaigning period and make a defensive stand on top of picks such as Axiata, Dialog and Westports.
In a strategy note today, the research house said the US-China trade war tensions is the reason for the volatility.
Furthermore, it viewed the sectors that are potential winners from Barisan Nasional’s (BN) general election 14 (GE14) manifesto to include the consumer and construction sectors.
In a report today, CIMB Research said it believes the market is expecting the ruling coalition — BN — to win with a comfortable majority of Parliament seats.
“BN currently has 133 out of 222 seats in the House of Parliament. We view BN’s widely expected win as neutral to positive for the market. The stock market’s performance post the election, will depend on the degree of selling pressure during the campaigning period and the poll results,” the report stated.
BN’s GE14 manifesto, which was launched on Saturday, resembled an early Budget, with pledges for broad voter bases (low-income households, Felda settlers, females, the elderly and farmers).
The key promises included a top-up on 1Malaysia People's Aid (BR1M) payments, raising the minimum wage to RM1,500 within five years, potential revisions in personal and corporate income taxes, expansion of affordable housing aid, special incentives and funds for Felda settlers, and subsidised public transport passes, broadband and other consumer goods/services.
The BR1M will be introduced for the households income of RM4000 to RM5000, which will receive a total of RM700 in two payments in June and August, while double BR1M handouts will be due in June and August for households earning below RM4000 per month and individuals earning below RM2000 per month.
The statement said the additional BR1M payments amount to at least RM3.71 billion or 0.25% of gross domestic product (GDP) in 2018, which comes on top of the prior week’s civil servant pay hikes of RM1.46 billion, effective July 1 this year.
New spending commitments imply that the budget deficit is unlikely to improve significantly from the target 2.8% of GDP, despite windfalls from higher oil prices and GDP growth.
The election committees (EC) will hold a special meeting to decide on, as well as announce the nomination and polling dates.
During GE13, the EC held its special meeting a week after the dissolution of the Parliament. The local media has reported that the polling date could be in late-April or early- to mid-May, and is likely to be held before May 17 (provisional date for the start of Ramadan).
Malaysian Prime Minister (PM) Dato’ Sri Najib Razak dissolved Parliament last Saturday (April 7), clearing the way for the widely-anticipated GE14. The event did not come as a surprise, as the local media had reported the PM could dissolve the Parliament as early as April 6, 2018.
The Election Commission (EC) must call for elections within 60 days and the EC has revealed that there are 14.94 million registered voters.