Hurrah…. Malaysian petrol price was lowered from RM2.70 to RM2.55 starting 23rd August 2008. We think this is indeed positive for the stock market as it opens on Monday. Cheaper petrol prices would translate into cheaper transport costs to businesses and a breath of relief to any household budget (to a smaller extent). We believe this approach is more pro-business rather than pro-people. Prices of goods and services are not likely to adjust downwards following the savings in costs of logistics. What we find more interesting in this petrol price adjustment is that it could be seen as the prelude of goodies in the up and coming Budget 2009. Just to recap, we had earlier expected the budget to be “people-friendly” (Check out our YouInvest Budget 2009 Wish-List written 28-Jul-2008).
Although government officials from the BN coalition had denied the petrol price adjustment being used as one of the tools to lure in votes in the up-coming Permatang Pauh by-election, we sense other wise. In our opinion, Mr. Anwar Ibrahim’s position is very strong in this constituent state as he and his wife had helmed this position for more than 20+ years. We guess everyone should have an idea of who’s going to win in this by-election but more importantly the quality of the victory. The government has definitely step up its ante in this event. Let’s list them down:1. Datuk Arif Shah Omar Shah, a very fluent mandarin and hokkien speaking Malay BN candidate was chosen the go head on with Mr. Anwar Ibrahim who’s one of Malaysia’s most charismatic political speaker. If you didn’t know, Datuk Arif Shah Omar Shah gave his ceramah in mandarin and hokkien (linguistically very impressive in our opinion) to a Chinese crowd last Wednesday. Even though he may touched the hearts of some, but getting voters votes during the poll requires tangible actions where the current ruling party lacks.
2. Deputy Education Minister Dr. Wee Ka Seong had recently allocated RM1.2mn to 6 Chinese schools in Permatang Pauh on 19 Aug 2008, "coincidentally" during the run-up to the by-election.
3. The Election Day was set on 26-Aug-2008 a weekday? Why? Why not on a weekend like the
08-03-08 general election? Well, everybody knows that if the election was set on a weekday then there is high probability that the working class voters be absent from voting. So, voters from Permatang Pauh, do your responsibility choose diligently and be a responsible voter, we don’t want to see phantom votes and postal votes to sway the general opinion of politics in this country.
4. Petrol pump prices were down -15sen from RM2.70 to RM2.55 starting 23rd August 2008, 3 days before D-Day in Permatang Pauh.Anyways, enough about politics, newsflow from corporate was still pretty dry and dull. The week continued on with companies reporting their second quarter performance results and will end until 1-Sep-2008. Performance in general was mixed, with some reported:
- In-line with expectation results with a twist of negativity in the second half outlook amidst political instability, high commodity prices, high inflation and slower demand growth.
- Below expectation results due to fluctuation in commodity prices, slower demand growth and rising costs.
- Almost none of the results were above expectation this quarter. Even if we had beaten expectations, investors and analyst were still bearish and caution on the weaker second half outlook.
For the week, KLCI was down by -9.5pts (-1%) from 1,095.05 to 1,085.6pts.
Forecasts wise, we think the KLCI had been down a bit too much and a bit too long, so, we think there is a potential rebound in the market this week. This week, we think the market has 70% chance of going up and 20% chance of staying flat and only 10% chance of going down. As we run up to the Permatang Pauh By-election date (26-Aug-2008) and Budget 2009 (29-Aug-2008) the relief rally will continue with strength.
Stock on our watch list is MMC Corp.
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