Tuesday, January 1, 2013

What lies ahead for Malaysian stocks

Despite not being a superstitious person, I like the number 2013 for whatever reason. While 2012 was a really good year for some consumer stocks especially, I just think that this year we may not see a repeat. Consumer stocks normally do well when people are rushing for defensive play. The notion that everyone need to eat no matter what caused people to rush to stocks that are associated with food, drinks, liquor, tobacco etc.

For 2013, it will be slightly different. Of course most already know that for the first quarter of the year, election will be a key determinant factor for investors pick. To me, that is not a factor as for quite a while now, my investment mindset has always been to avoid government related stocks - even before 2008. I have already seen or experienced enough of Renong, UEM, Idris before the turn of last century. Even after the experience of change in PM twice in my investment lifetime, I have not touched companies like Scomi, CIMB (even this) or any stocks that to a slightest of my mind are related to any portion of the government.

You may then ask what about UMW, Malaysia Airport etc. which I have invested in. These are GLCs (yes, I know CIMB is also a GLC) and no matter what happens most GLCs will remain to be GLCs and owned by government whether there is change of leadership. Companies like Sime Darby, Maybank, RHB Capital etc. will remain to be a GLC knowing that it is too difficult to even move the ownership.

Investments in other stocks market for example US is different. Even after the so-called bailout where for a time, the Federal Reserve was owning a substantial portion of AIG, Citigroup and still owning GM - the ultimate focus is to dispose them off at any instant of them with opportunity for disposal.

Malaysia is much different. If I am not wrong, EPF as a fund its involvement in Bursa is way more than even Singapore's CPF in SGX as I have read before somewhere (may be wrong) - perhaps we are the only country which is seeing this phenomenon - one or very few funds having such large influences over one single market. With inclusion of KWAP, PNB, Khazanah and Tabung Haji, it makes the Malaysian market to be quite unique I should say. If I happened to be wrong and Singapore's government related funds in fact is much heavily invested than Malaysian government controlled funds, both of them have to relook at this I should say as these really stifle entrepreneurship.

As an investor, if I still want to be in the Malaysian market, nothing much I can do as there is no point whining over it - just have to be smart. As such value alone sometimes does not mean much in Malaysia. There are so much element that we have to know to be a successful investor. I realize many uses ROE, PE and so on to judge how cheap some stocks are. Not wrong, but I guess we have to do more. Investing in Malaysia, there are just not enough looking at stock price, earnings, assets, balance sheet. Sometimes we have to even look at the Top 10 or 30 investors. Who are behind that company we are investing into...

A Malaysian company stock scenario can be as such as the owner manager may own 50% of the stock, while another 30% to 40% may be owned by Top 3 local government controlled funds while remaining 10% to 20% are invested by retail. Who has much more say over here?

Hence from there, 2013 will just be no different from 2012. It is just a number. As long as situations as such remain, the Malaysian market scenario can actually be quite calm despite all the noise that occurs overseas especially for large blue chips stocks. EPF has 25% to 30% invested into the equity market. The asset portion (and so will investments) will continue to grow as more and more savings are contributed to the fund size. It just has no choice unless to go overseas or to invest more in Malaysia. Overseas however we will see much more volatility. Cannot control the market or one single stock anymore...As a result, contributors have to be prepared for volatility in the yearly dividend income - which to me something the current government is not prepared to face or explain if needed be.

For me, there are still many more opportunities in the Malaysia market as I just have to continue with my work of avoiding something when I am not too sure of - while there are volatilities in some stocks for me to grab opportunities from. There are still many good companies with proven management. There are companies in some sectors which does not need much of a license to operate their businesses in. Even if they need the licenses, competition will take its course to judge the winner. (Ever wonder now why sometimes I like companies in hugely competitive environment.) Is Malaysia market still a good place to put my money in? The gist of things are, I am born, bred, have my education here in Malaysia and Malaysia is what I know best.

Now, these are things which I will continue to watch out for and stay tuned!


Shane See said...

Malaysia boleh!

Shane See said...

Recently I identified two stock. One is PIE and the other is SKP Resources. Would really like to hear your opinion on both the stocks.


simplelifeadvocate said...

Yeah, add another pair naim/dayang

felicity said...

That's a lot to ask. Need to inform, some of these companies I will need to know better as there are separate industries we are talking about here. I am not very familiar in the oil and gas as well as plastic industries.


- PIE - a subsidiary of Foxconn or Hon Hai. Wow, this company is so small compared to Foxconn - the famed manufacturer of Iphones, Ipads etc. Seriously if I want to invest in PIE, would look at Hon Hai directly as I am definitely not sure what kind of value it provides to the entire chain. While this is a really good company, I am not touching it. Realise that iCapital buys PIE. Don't know why...

SKP Resources - doing good, but owner recently selling. Big question mark...anyway I think I have read many times the thinning margin of the plastic moulding industry. Got to be afraid of China.

NAIM - more diversified and holds controlling stake in Dayang. I like Dayang better.

Dayang - focus in oild and gas. have to admit, it looks good. Thinning margin but I guess it is normal with its increasing revenue. I guess if it exploration over in Sarawak over marginal oilfields and deep water etc are on track, I would think Dayang would do good.

As I do not know Sarawak that well, are NAIM or Dayang related to the CM in Sarawak?

CrabGrill said...

HDBS leaps from RM 2.40 to RM 2.83. I like durian stock. Buy and wait for durian (not the share price) to drop.

CrabGrill said...

Hi Felice,

What do you think about Ajinomoto? A cheap consumer stock. There is one thing I don't like about Ajinomoto - the branding of its seasoning product and spices. Example: "Vono". This kind of name simply spoil my appetite. A simple name "Cendawan" sounds more natural, healthy and appealing. Printing "Ajinomoto" on black pepper only makes it sound cheap and can't sell at higher prices. "Sayang" or "Suka" can sell more expensive.

felicity said...

HDBS is actually not pricey if compared to other stockbroking shares. I guess with passing of the founder, there's speculation on them selling. QUite possible.

CrabGrill said...

Actually I am speculating that people will buy HDBS for her investment bank license. And she is quite juicy. If she is willing to marry off herself, somebody will be willing to pay a very good price. I think that the stockbroking business is getting more difficult and selling off is a better choice (and in fact there is no other choice). It is like a girl at her late 20s who can't wait long to get married. For that reason, I believe that I don't need to wait for too long and go into really "long-term" investment.

CrabGrill said...

It happens faster than I could imagine. I should have bought more. What hindered me from buying more when I put my first comment here? Patience. I have little patience, and so only 3% of my portfolio for her. Now only I know that she loves me more than others do.

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kmm said...


'As I do not know Sarawak that well, are NAIM or Dayang related to the CM in Sarawak?'

the chairman is his cousin