I am. More hopeful.

I was. Very disappointed. When I heard about results from 30 seats were doubtful. There were many allegation elements of irregularities and even outright frauds.

The anger. The disappointment........is slowly subsiding but I could not erase those doubts. The 60,000  KL and 120,000 Penang people turned up in two gigantic rallies sending a message to BN. We wanted a fair and clean election. Is that too much to ask? We wanted to let BN knows this is Malaysians tsunami. Did they get the message? PR won the popular votes. 52% said yes to PR. Only 49% to BN. What are they going to do?

Perhaps the expectations for PR taking over over Putrajaya were to high, but certainly not unrealistic. When dust settles down, PR has works to do. Lots of them. They certainly had made inroads into Johor, Sarawak and Sabah. The willingness of PR to move outside their comfort zones this time is certainly paying off handsomely. That momentum needs to snowball.

The gatherings so far have been peaceful. It is certainly setting good examples to the world. This kind of orderly pressures from the masses pressing for reforms certainly cannot be ignored anymore. Civilized and peace loving Malaysians are good enough to impress foreign investors.

All in all. I am. More hopeful.

Back to stock. The Star is the most hated stock in KLSE. It is hitting 10 years low. But they pay 7% dividend yield with single digit PE. EPF is dumping but OCBC bank and Great Eastern are picking up the shares. The  reason of selling cheap is obvious. You and I know we don't like their major shareholder which is linked to MCA. The franchise of the business however is still pretty much intact. The profits have been on the rising trend. They have shown some pro-active in capital management by paying special dividend in 2010. Overall, the business is still well run.

We all can have political differences and frustrations. As much as I dislike MCA, I still read the Star. To have balance views, you need them in addition to MalaysiaKini, MalaysiaInsider, Malaysia Chronicles, etc. When comes to investing, a cool head shall prevails.

Small Cap stocks - attractive. Big Cap almost fully valued

A very short entry. Big cap is fully valued selling slightly above last 10 years average around 15X, it's now selling for 16X.

Many small cap stocks less than 6-8 times are worth putting in some money for tactical play. The retail investors are taking the baits. The registration for broker briefing are full. The demand is so strong so much so that it was fully took up within days. Upswing can be violent. Those have still holding, hang on to the gains.

There is one name that I like ---- SUCCESS.

Koon Yew Yin and iCapital hold this stock.

Somebody got it right.....yea it's a relief rally

I told my readers that I will not participate in the rally if BN wins. I just got invitations by  local stock brokers to attend their market outlook briefings. In short, they are saying the retail investors should buy stocks since the big risk risk has been removed. Most also said we are yet to catch up with the regional stock markets. I deleted those invitations without hesitations. It's bullshit and a waste of time.

Somebody got it right called it as a relief rally. There was a huge buying panic when the stock market opened on Monday.  A little bit of today too. That basically because the local fund managers were panic and afraid of being under-perform the index if the stay in cash. They sold down a lot of stocks prior to GE. Their game plan was to buy at lower price. It's turnout that they were forced to buy even at higher prices pre-GE. Smart money? My ass, smart money.  A super high volume spike is not sustainable.

Long term fundamentals are deteriorating.  A few reasons:

1. The foreign funds begin to get worry actually. Credit Suisse for example sounded cautious

Those reforms now seem in doubt, Credit Suisse said in a report on Monday, although Najib is expected to push ahead with $444 billion Economic Transformation Programme aimed at boosting private investment and doubling per capita incomes by 2020.

If there is no follow through buying by foreign funds, who will be the next buyer?

2. Stretched balance sheet

Najib was trying to do window dressing to prop up Malaysia GDP growth by stretching our balance sheet. Debt/GDP has never come down to less than 50% in last 4 years.

It simply cannot continue with this trajectory or else risking our credit worthiness downgrade.

Malaysia economy growth will risk slow down if BN were force to "deleverage" in the first 2 years. 

Najib may be an economist by training but I think his administration has one the worst economy mis-management.  

3. Subsidy cut and widening revenue base like GST may not come true. I won't be surprise if Malaysia gets a downgrade as there were already warnings firing shots last year. We never get serious with what we promised. 1 Janji? Only orang kampung tertipu. 

4. Perceived political stability may come into question. If MCA were to leave BN or no multi-racial BN coalition government is form. O I was wrong, MCA? It's non-existence actually. Eunuch roles suits them better.

The rural/urban divides will continue to expand.  You can see how the kampung folks are so easily bought with RM 500 or easily get intimidated during this round of GE.

The intellectual divide will continue to widen.You can see which side got "brains" by observing how PR components' brains at work during campaign period. Even though they don't have much money, they are really creative and able to connect with people. 

Look at their manifesto. Scrutinize their shadow budget. PRs got more professionals and smart brains. BN got old tired people that keep thinking how to rob people's wealth and share the left over with the kampung folks. They copy unashamedly. 

Premium of safe heaven? Looks pretty shaky to me.

5. It's not peaking yet because no sheep or pigs got slaughtered. True.........small cap is yet to make its all time high. 

6. Najib's position is really shaky. The next successor can be even more radical not moderate. They must be thinking if they have survived "Chinese tsunami" this time, why bother to reconcile? They won't accept it's a Malaysian tsunami. Or what ever lah, menang tetap menang. More complacency will come in. More money will go into Iskandar. Bla...........

7. For many high net worth retail investors, money is already started to leave Malaysia. More soon. Not only Malaysia suffers brain drains, it will suffer capital drains as well. Why Robert Kuok leaves Malaysia in the 70s. A far sighted man like him deserves my respect. He saw what was coming post May 13 1969 and New Economic Policy. We had lost decades. We will lose may be another decade or more........

I personally have started to invest outside Malaysia and that percentage will continue to go higher over time.

I am not a smart man when come to predictions and wanted to be wrong badly with all these arguments.

Bottom line: BN wins the battle but lost the war. Niamah!

06.05.13 - Lim Kit Siang: My Malaysian Dream - all the way back to 1957

One for all and all for one
We care not what colour, creed or religion you belong
For aren’t each of us Malaya’s son
Then why let silly racial quarrels prolong?

(from poem written in 1957 for class magazine – when I was 16 and in Form III in Batu Pahat High School)

http://blog.limkitsiang.com/2013/05/05/my-malaysian-dream-all-the-way-back-to-1957/

05.05.13. Ubah.....considered it done

How can I not make an entry today 05.05.13. It's such a historic day.

The other date that has a great significance was 31.08.57

It has been a long time my wife and I never felt so excited. Just can't wait for 8.00 am of 05.05.13 to arrive. I was so excited that woke up a few times at night checking  my alarm clock. Damn, every hour, minute and second seems to be so sloooooooooooow.

The wait was finally over. The morning sun shone through our big glass panel greeted us with a hopeful morning. We dressed up in our red couple T shirts and got into our red car. We consciously made everything red today reminding everybody to mark a big cross on Roket checked box. People took notice. They gave way at T junction and thumbs up - signs of approval. Those in BN uniform, outside the polling station, were trying to extra nice to us. Too late, we said in our hearts.

When we arrived at the polling station. We heard new language. Sudah Ubah? Sudah. replied the other. The que was long though it's just slightly over 8 am. Good sign. Good sign I told myself. The higher the turnout, the higher the chance we flushed out those aliens intrusion. My red shirt presence made the officer felt uncomfortable. Name, he asked. I shouted out my name loudly in return so that everyone can heard me. He found my name. I moved on to get my left index marked with so called indelible ink. He shouted the name Tan xxx xxx which was not my name. I corrected him. In my heart, Niamah! Are you trying to be funny and doing hanky panky thing? Fuck you EC.

We drove off after fulfilled our duty as citizens of Malaysia. People were still coming. Bearded men in Songkok, Ah Pek in short pant, all started to salam with one another. What a change. Green and Red used to be like oil and water. Now is like honey and water - mixed so well. So sweet. Aaaah.......refreshing. What a change.

56 years ago. The British called the bluff on the three main races Malay, Chinese and Indian. They thought the three races could never accepted to live together. They consciously divided our forefathers socially and economically for decades. The British was wrong, our forefathers saw through their cards. They knew who was the real enemy. Our forefathers kicked out the Brits who siphoned out tin, rubber and uncounted other assets that we could never found out.

The little unknown Malaysia was doing well after the independence. Somehow, something went wrong along the way. A group colonist emerged. It's an inside job. They hijacked our country. The process of hijacking was so subtle like the trojan horse. Privatized here and privatized there. Bailed out here. Bailed out there. The racism poison gas was released in the gas chamber to all Malaysian without we realizing it. The racism toxic live in us for two decades. When we woke up, we realized that we have been poisoned. I felt it. You felt it too. We are dying. It's a slow death. You and I  are on our knees. Crawling, trying to get out. Can we make it? In my book, Ubah - I considered it done.

1.25 pm. 05.05.13

Supermax made me sit up and take notice

When this guy made a stand, he earned my respect almost immediately. A business guy who dare to say these kind of things surely do not need to depend on our gomen. I suspect his business should be competitive internationally. If you are good, then you don't need to suck up to the government. 

I have not been taking a look at Supermax for while. So I went and had a quick browse on their 2011 Annual Report. A couple of highlights.

See. They are no 1 in US dental glove market.

This company grew their shareholders' total return by 7 folds.

EPF has been selling shares in this company since end of last year. When people said the company said Supermax kena hit because of what the chaiman said certainly is not true. Keep this company under your radar. Buy when it falls hard when somebody is trying to to punish them unjustly.

Post GE: What would you do if market plunges?

As at 25 April 2013, the daily trading participation statistics were quite telling. Retail investors 11%, local institutions 53% and the balance goes to foreign investors. The KLCI made fresh new high, 1,718 but I never felt the excitements. I suppose I wasn't alone. I have been thinking whether the market has been climbing wall of worries. Are the worries genuine or just silly irrational fears?

There have been many talks that if PR comes to power, the market will surely drop. The most popular explanation is uncertainty. Uncertainty of power transition or economics policy. The second theory is disappointment  Failure of BN to retain power will certainly create disappointment to certain group of investors or speculators.

Both theories can be correct but what is more important is this. If the market really plunges, will you scoop up with two hands? My take is political driven sell-off seldom last long. It is a matter of time, people will wake up. An event like that will create a trading opportunity.10 - 12%  corrections in oversold territory will be a good entry point, then sell into relief rally of another 8 - 10%. 

For those who practices a bit of  market timing, the answer can be a bit more complicated. The overall regional markets that have been hitting new highs but it has never corrected significantly despite of  many signs of weak global economy recovery. A sharp corrections in external markets may push the market down after triggered by assumed GE 13 political tsunami.

For those who believe in coupling theory will be even more complicated. The governments intervention around the world had turned every market participants into very disoriented mode. The non-stop liquidity pumping activities have been supporting the equities markets. It was not entirely correct however to say that all asset classes, especially risky one, benefited from the liquidity. BRICs indexes were still way off from their 2008 peaks despite of it accounts for 50% of global growth since 2001. Commodities prices tanked and yet to make any new highs. In other words, the recent gain so far have been quite narrow(US equities) or lagged such as Japanese market and to some extend of Malaysia equity market. This worries me a lot and at the same time stress me out seeing it keeps rally days after days.

So the answer ranges from very simple to a very complicated one. To make things simple, the true north is always guided by valuation. Post GE 13, one thing for sure -- I will deploy cash to buy stocks on big sale if PR wins.

But what if BN wins and the market rallies? I will surely not buy into that rally and I will explain why in the next posting.