Pauline Yong Blog
General Election - Crisis or Opportunity?
Yesterday KLCI plunged 40 points (2.5%) to 1635, while the KLCI futures plunged almost 60 points to 1624! Technically speaking, KLCI has violated 50 day and 100 day moving averages, and looks like the next supporting level 1620 (200 day moving average) is shaky.
All these happened because the latest speculation on the election date is March 30th 2013 which has caused investors highly uneasy as they are worried about the outcome of the election.
In my personal opinion, (no offence to any party), that there are 2 possible scenario: either the BN will win by marginally or lose by marginally, assuming the opposition party increases their parliamentary seats from 20% to 40%, ie, from the current 82 seats increases 20% to 98 seats based on the assumption that the MCA (Malaysia Chinese Association) will lose majority of its 15 Parliamentary seats plus several seats from other BN parties. Or for the opposition party to win marginally, they need to secure 112 seats out of the 222 parliamentary seats, in other words, 14 more seats on top of the above scenario.
Given the above scenario, in either case, most likely we shall see the opposition party gaining more seats in the parliament. In the eyes of the foreign investors, this is good news because this may mean there are more checks and balances in the country. For Malaysians, this is good for us too as no matter which party win, the winning party will work extra hard to gain the people's votes so that in the next election they can retain the power; while the losing party will also try their best so that they can win the next election.
Currently, as the EU and US economies are weak, Asia is still the no.1 choice for the multi billion international funds. Not only that, as the global interest rates remain low, rich investors from Japan, Korea, China and Singapore will buy up the properties and shares in the ASEAN countries and they will even set up factories here.
Rosy picture like this is happening but it is slow due to the uncertainties in our election. However, once the election is over, foreign investors will come in big wave if they see that both the ruling and the opposition party work together to fight against corruptions, reform the education system, bring in more FDI, and to build a truly 1 Malaysia for its people.
So from now till the polling date, the KLCI will continue to be volatile, political linked stocks will sell down, but I believe in any crisis there is an opportunity. Warren Buffett said, "Be fearful when others are greedy; and be greedy when others are fearful".
Happy investing,
Pauline Yong
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Discussions
1 person likes this. Showing 50 of 102 comments
Can't fight the urge and keep staying at the sidelines much longer. Quality counters have dropped significantly from last week and have become attractive again. The index has managed to stay above 1,600 which is a good sign and there appears to be a mild rebound at the moment. I'm going to take the risk with a few quality counters. At the same time, must be alert and be quick to cut loss should this seeming rebound go the other way again.
2013-01-22 12:11
quality counter is the buzz word, if foreign fund see this as opportunity, the down trend will be limited even break 1600 mark.
actually, regardless who won the ge13, it will not change the 30 counters operation so much, these counters r so many ppl's rice bowl.
2013-01-22 12:15
Yup, and it's mostly with the poor man's shares - call warrants HAHA! Should things not go my way, the loss in ringgit wouldn't be devastating although the percentage loss will look big. You can't try to make money by staying at the sidelines all the time. If now isn't a good opportunity, when is?...when counters like Axiata etc. go sky high as they did recently? But must also be cautious and not jump in too deep. I'm looking at CWs with some life left - six months and above - and with the ex. price "not too far away". Like TM-CU.
2013-01-22 12:21
dont say that MC, you make me lose discipline! :)
me still searching more good stocks ni........
2013-01-22 12:24
yup, KC market is rebounding, only seller become irrational, too much speculative opinion around forum. MC i agree with, i am too hunting for some good CW play, good opportunity but be watchful of the index
2013-01-22 12:37
Some people are fearing it will be like 2008. Your guess is as good as mine but I feel there are many differences. For one thing, the external conditions are much better compared to 2008. Internally, this time around, the political situation isn't as muddled as it was the last time.
I disagree with Alex Liu's recent post at his blog concerning the Sabah I.C. matter - I don't think it will result in too big a backlash simply because of one thing... that was another time and people now tend to look forward. Our economy is doing okay enough at least and the foreign funds are aware of that. When prices reach a certain low point, they *will* come in for those solid, dividend-paying counters. I'd want to be there when they do so I'm buying my cheap tickets selectively:-) But as @chleong says, be watchful. As in "Walking Tall" - Walk softly and carry a big stick... and be quick to run too should things go the other way:-)
2013-01-22 12:45
kc loh ... if u be normal . i like ur post . but if u crazy seem annoying me . debt deiling ? can explained
2013-01-22 12:49
haha ... i let u have all the time . come explained what debt ceiling ? i a moron need ur explaination
2013-01-22 12:51
the other side of crisis is opportunity.
some investors will choose to buy in now.
i am the one of them
2013-01-22 12:52
If your stock has already gone 2 notches down ......why not.....if they cal GE it only means long wait n not necessary it will drop further......if all sock drop 50% we will have anarchy in here lol
2013-01-22 12:54
i have cleared all my stock last wednesday,
never think so fast to buy back again.
still have many bargain buy in market.
2013-01-22 12:59
haha ... klci 1699.68 peak now 1623 .. will later everning another drop or reversal . i jz want to wait n see ...for this whole week the drama going on . opportunity always be here as long as u have cash
2013-01-22 13:01
Well the question depends on how you kick start a engine.......if the engine kickstart immediately very resounding, your afternoon may be blue skies.....but if the kickstart takes many attempt then very sure it will be gloomy.....
this morning kickstart was good in terms of longer period but I suspect it will be confidence later in the day
2013-01-22 13:06
KC, they'll do something about it. Will drag and drag along the way trying to score political points but they will cobble together something. The show will go on. There will eventually be a tipping point somewhere in the future where they finally can't kick the can of postponing the inevitable any longer. How far away this is, no one knows.
But whatever, it's prudent to also put money in precious metals in whatever form (physical, SPDR etc.) . In a financial crisis and turmoil, and when nations need to reset their currencies, the prices might explode.
2013-01-22 13:07
raising the debt ceiling actually doesn't help, just kicking the can down the road, yup you are right. but for now, i think its necessary as a sick US will be a bane for the world economy. They should work on the original plan and do a Bill Clinton! , ie some austerity measures coupled with the tax on the rich. if economy recovers, hopefully they know how to use the savings to reduce their deficit la.
Washington Posts noted this although their write-up was skewered towards something else!
http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/09/the-fiscal-cliff-is-an-austerity-crisis/
2013-01-22 13:19
Kicking myself over SLV-C4. It was at 0.065 but I insisted on 0.06. Now can't get it at that price anymore. Very quiet counter but it's a cheap way to bet on silver which I believe will easily go above US$33 when attention is on precious metals again.
2013-01-22 13:54
That's how the media is in any country including the so-called "free" ones. There will always be vested interests with news/articles that try to influence readers towards supporting their positions. It's the same with the media here, printed or online - no one is really "free and neutral". This is why I like a forum like this one. The goal of everyone here is simply this - to make money. Having the same desire makes things direct and a lot less uncomplicated.
2013-01-22 14:02
It has gone above that before. In fact, at some financial sites, pundits are predicting above $40. Doesn't look like so at the moment but we have seen how things can go during a rally. And silver has one other advantage, if you can call it that, over gold - it's also an industrial metal. With both, there's only so much available. Unless if someone suddenly finds a new source which could be easily mined, the supply will remain tight.
All the easy gold and silver have already been mined - the kind where you find substantial quantities when you strike a rich vein. But most of the current production are through expensive methods where companies extract microscopic amounts from mines that were previously uneconomical. They can't continue operations if the price goes down a certain level.
By the way, I'm also buying into the idea that one day silver coins could make a return... when fiat money collapses. That was how the world operated hundreds of years ago. It made international trade between nations possible. If there's a loss of confidence in fiat money - and no one can confidently say this is "impossible" - the world will need something which everyone can accept as "value". Gold and silver are it.
2013-01-22 14:13
yes silver willfly when economic good n shortage of silver when industry like electronic producer need alot
2013-01-22 14:15
Been somewhat fortunate in that I've not bought anything the past couple of weeks with the exception of Apple-C6 at 0.04 (now 0.03). Had taken advantage of the rise to sell a few counters. But didn't make anything; just broke even to free my capital. Still trying to get a few counters. Now the sellers have gotten into a "jual mahal" mode after the mild rebound and are holding out. Let's see who has to give in:-)
2013-01-22 14:18
jz wait mat cendana . dont need to rush . cash is king . many oppertunity . people rushing into be slaughted in this uncertain situation . tml no the end of the world
2013-01-22 14:21
Melvin, I still haven't bought AA-CY yet. Had -CW for a while but sold at buying price (0.01) since it doesn't look likely to go to 0.015. Looking at CY (now 0.05) but it's TM-CU that I prefer more. Lined up at 0.035 since yesterday. Might have to give in at 0.04. But let's see how how it and BSKL goes first. It's a buyer's market at the moment and it would be great to have a 0.05 margin of safety:-)
2013-01-22 14:51
Good analysis. Is opportunity for the prepared, financially and emotionally.
I was buying yesterday and today.
2013-01-22 18:29
Don't know where u guys going with this !? Market down 40 pts is a big thing coz selling only heavy weight and dividend stocks. There must be something "BIG" coming. Firstly, can't be Fiscal Cliff as not whole world market down sharply. So, has to be a local factor. Secondly, can't be election. We r living in a virtual info age. Foreigner knows when is our election coming, they would have been out of our market if it is election way before, not now. This is not a man on the street knee jerk reaction for election. This is some insider institution "dumping" of blue chip and dividend stocks. This is only a first wave, when "the news" become reality then don't know how market will dive.
2013-01-22 19:27
ya .. i agree . actually last week the dumping already but not large quantities. maybe when news coming , all retailers investor already stuck n been slaughter
2013-01-22 19:29
Looks like it's going to be a happy Maulidur Rasul after all. But have to remain cautious in not having too many positions. Sentiments are rather shaky at the moment and it can easily go the other way just like that. BSKL had gone down too much over the last two sessions so this is what analysts might call a "technical rebound".
The current situation is not good for investors but great for traders... if one is fortunate to get in and out at a good time. I think there will be quite a few similar sessions in the coming weeks, which will be the reaction of investors and traders to news/rumours of the GE and similar local items combined with external news. I agree with @chongkonghui in that we have to be financially and emotionally prepared during these turbulent trading sessions. As seen from Monday, there will be both turmoil and opportunities. It's how we respond that's more important. We can't control the market but we can control how we react to its movements.
2013-01-23 11:05
agree with u mat cendana ... but still many investor small fish so confident . total agree withu mat cendana for second part .at least here still have a rational investor
2013-01-23 11:09
Good term, "technical rebound"ing.... or may be change to "technically rebonding"... cashing up every where... someone need money for pre-election goodies. Big fund such PNB, EPF, LTH etc play-play now...
Mat Cendana, you did talk about precious metal. How about turn some eggs to money market?
2013-01-23 14:38
@razmy, I presume there might be something like that at the Chicago Mercantile market. It appears they'd trade in ANYTHING - Heck, even intestines!
That's why I'm cautious at the moment - don't know what these big funds are planning to do. If there are opportunities like the past two days, then yes, should take the opportunity to buy "a bit". But I don't think it's prudent to put in too much capital right now with things threatening to change directions at a moment's notice. Tomorrow is a public holiday and there's only one trading day after that. So I'm staying at the sidelines for now.
2013-01-23 15:16
And gold too. Very closely. I'm still regretting not buying SLV-C4 when the market maker was selling at 0.065. This isn't an actively traded counter but it's a great way to bet on silver without having to put up too much capital.
SLV-C4, Ex. US$ 33.00, Ratio 150:1; Expiry 26/11/2013
iShares Silver Trust (SLV.P) is now at $30.65, having suffered a 0.54 fall last night. I'm hoping to have the chance to buy this one. Seller's price at 0.075 - I feel they'll have to give another 0.005 discount at least for me to come in. Let's see how SLV.P trades tonight and also next Monday.
2013-01-25 17:49
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haha .. what i know is i dont believe when market down will recover in a day .. today going little bit n if tml crash again ... the confident of investors will gone for long time .
2013-01-22 12:07