Terence Wong, CIMB
Sectors that could lose out. Concerns will emerge over cyclical sectors such as construction and property due to possible disruptions and weakening sentiment. Investors are also likely to fret over sin sectors like gaming, NFO and brewery in view of the opposition’s control over several non-Malay belt states. Another concern is the opposition’s economic policies which include minimum wages, lower petrol prices via higher subsidies from Petronas as well as a socialist safety net.
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Kaladher Govindan, TA Securities Sdn. Bhd.
The key concern would be the impact on implementation of various long-term projects, especially the Northern Corridor Economic Region, with Penang falling into the opposition's hand and Kelantan becoming a much stronger fort of PAS. As it is, the incoming Kedah Mentri Besar has already said that he will review the implementation of NCER, including the Yan Petroleum Industrial Zone project. This development may have some negative effect on share prices of stocks like MRCB, Scomi Group, Scomi Engineering and UEM World. Concerns may also arise about the implementation of other projects like the Ipor-Padang Besar double tracking and Pahang-Selangor Interstate Water Transfer, which may exert selling pressure on share prices of companies like MMC, Gamuda and Kumpulan Perangsang Selangor.
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Vincent Khoo, Aseambankers
The construction sector will be most affected by the changing political landscape. We are concerned over implementation delays for yet-to-be awarded 9MP mega projects, as resources could be geared towards:
(i) an overhaul of the government’s machinery and delivery system, rather than project implementation, and
(ii) socioeconomic causes such as maintaining subsidies. Likewise, some state projects now under opposition rule could be sieged by concerns on land alignment and transparency of project awards.
The implementation of the NCER development initiative may also see some setback. We expect near-term prospects to be unexciting and challenging in terms of margins compression.
(i) an overhaul of the government’s machinery and delivery system, rather than project implementation, and
(ii) socioeconomic causes such as maintaining subsidies. Likewise, some state projects now under opposition rule could be sieged by concerns on land alignment and transparency of project awards.
The implementation of the NCER development initiative may also see some setback. We expect near-term prospects to be unexciting and challenging in terms of margins compression.
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