One of the stocks which have been under pressure already is Parkson dropping more than 30% from the time I bought it. Parkson is more of a retailer targeting the richer people or higher middle income nowadays with outlets in expensive locations such as KLCC, Pavilion, 1Utama and in Beijing, China I remember seeing an outlet in one of the most expensive streets near Tiananmen Square. When times are tough, the luxury goods are the ones to suffer the most. People will probably go to a Padini rather than a Marks and Spenser outlet. In 2009 for example, Walmart which targets the general lower and middle income group was the only Dow 30 stock that was higher for the year. The other 29, like Microsoft, Bank of America, GM etc were down for the year.
AEON is unlike Parkson where its market are more for the average people. So are Giant, Tesco etc.
Similarly, beer in Malaysia is probably a more luxury item targeting the non-Muslims. One can say that many people tend to shift to wine etc., but that too. In the most recent, quarterly report this is what Guinness Anchor ("GAB") had to say. GAB is the distributor and brewer for Tiger, Heineken and Anchor. It is the larger of the two between GAB and Carlsberg. It says that it is in fact feeling the heat, after several measures by the government - so fast already?
During tougher times, investors should go for defensive stocks - this does not mean one should look for cash to hold as it seems that governments all over the world are printing more and more money and I just do not know what to predict out of it. It seems to me that the period of low interest rates will continue to persist but yet economies are moving quite slowly. Last Thurs or Fri, US just announced a very good quarter with GDP growing 4.3%. This is one good sign.
Malaysia is quite different, possibly facing tougher moments in near future, as only the last few years, BR1M was introduced, petrol price was not increased, while the country's debt was on the increase. While giving direct money to the public is good, surely, this cannot persist which is why the reduction in subsidies we are seeing now. The more I look at it, the more I think the government has just no choice but to allow them to happen. The right thing to do? Let's see the results in 2014.
So, what should we do for 2014. For me, I would be more careful. As I have been, financial and property sectors are always a danger. I have been avoiding these sectors for a long time and it seems that I have not been too wrong although they do not face deterioration in market cap and price but the increase were not great. Look at Maybank, CIMB. The ones that are probably doing better is Hong Leong Bank, RHB Capital.
Properties. Look at this announcement by BNM. As one now should know DIBS will not do the trick in slowing the property prices but brakes on interest capitalisation scheme would just do the trick - hopefully as high property prices would just put people in tougher situation as property is one of the largest ticket item for any family or individual.
Do not expect tough prices or to be launched properties to drop as the developers are used to these prices nowadays, and will not drop prices, but slow down launches - and with inflation, their costs will definitely be higher. So are the challenges in hiring foreign workers, now.
So, what are defensives? Food staples - good, strong brands. Companies that do lots of exports as it seems some of the countries are picking themselves up again - remember one of my article on latitude tree earlier. Perhaps palm oil stocks again? - if they ever drop to a good price point?
Rubber gloves may be still strong, although it seems that Hartalega nowadays is winning against Top Glove. Toll roads as with higher petrol price, people have no choice but to use shorter or faster route although this may not be popular stocks.
Anything, do let me know.
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Anyone who have been asking me whether do I look into averaging down for Parkson - I do not, as I am still saving the money for Keuro's rights and I do not see selling any of my stocks for now, as NTPM, MAHB, DKSH, Padini seems to me defensive enough.
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