More Market Comments

Posted on Singapore Business Times:

• Aberdeen Asset Management, which manages more than US$40 billion in Asian ex-Japan stocks, said it continued to overweight Malaysia and favoured financials such as Public Bank.
  
  'It's not as if the government has changed. The mandate is much weaker than previously, but it doesn't change the fundamentals and growth rates,' said Aberdeen investment manager Andrew Gillan, whose other picks included retailer Aeon and food and beverage firm Fraser & Neave Malaysia.
  
  'We think the market overreacted,' said Eubee Ong, a fund manager at Phillip. 'The political situation is still very stable. In 1969, there were riots when the opposition won big, this time it went smoothly.'
  
  Fund managers were, however, less bullish on palm oil producers such as IOI and Sime Darby as valuations remained relatively high despite Monday's selldown.
  
  'Commodity plays are the most attractive sectors, but they are also the most expensive,' said Leslie Phang, head of investments at Schroders Private Clients in Singapore. 'Our preference is to own the underlying physicals rather than stocks.'
  
  Mr Phang and other fund managers said investors will continue to shun developers and construction firms, in particular those with projects in Opposition-controlled states, such as Equine Capital.
  
  'There is ambiguity regarding the actual implementation of previous decisions made by the government,' said David Ng, who helps manage RM6.1 billion (S$2.64 billion) as chief investment officer of HwangDBS Investment Management.
  
  These projects include the Northern Corridor, which will link the Opposition-controlled state of Perak to other northern states and a bridge to link Penang island to the Malaysian mainland.
  
  Mr Ng and other investors also cited possible delays to hikes in electricity tariffs and a reduction in natural gas subsidies that would dent earnings at firms such as power generator Tenaga.
  
  Deutsche Bank said in a note to clients it expects the proposed tariff review to be delayed until 2009.
  
  However, looking further ahead, investors said the election setback may be the catalyst to force badly needed political reform in Malaysia, which would involve modifying policies that discriminated against the country's minority Chinese and Indians.
  
  'Prime Minister (Abdullah) Badawi has acknowledged electoral discontent and how divisive cultural differences have become,' said Stephen Corry, investment strategist at Merrill Lynch's private bank.
  
  'Mr Badawi's priority and emphasis is now to unite Malaysia with a clear objective emphasis to grow the economy and open up further to foreign investment. This, if it happens, has to be a positive,' Mr Corry said.

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