Looking at how all the heavyweights, including the PM himself, rushed to P44 Permatang Pauh to try their best (or luck) to fish for as many votes as possible for the coming by-election this is no doubt the mother of all by-elections. Two PM-in-waiting are fighting tooth and nail – one tries to return to the Parliament while the other tries to stop him. While Anwar’s supporters are already complacent that their charismatic leader could win easily a sudden drop of postal votes could spoil the result and give a perception that Anwar’s popularity had shrunk. Despite the huge resources machinery and dirty tactics from ruling government the turnout for its talk was nowhere near the one conducted by Anwar.
Sure, Anwar is no angel and when he was sent behind bars for sodomy 10 years ago, many applaud. Anwar was as dirty as the current ruling government when he was part of the team back then. But people are ready to give him a chance – hoping he’s a different person now after his suffering behind bars. In fact the people has no other choice but to look at Anwar as the only hope they have since the ruling government under Abdullah Badawi’s leadership is still screwing up the country’s economy after the Mar-2008 general election. In order to cling to power there’s no other choice but to perform an express sodomy part II to stop the ambitious Anwar.
Just how bad did Abdullah’s team screwed up the country’s economy? Bad enough that the ruling government has no other way but to slap IPPs to raise money via Windfall-Tax and it won’t be the last. The government will announce its budget for 2009 on August 29 and there’re already speculations the government will raise gaming taxes by 5 percentage points. Who said it’s hard for the government to raise money *grin*. The local currency is already going down the toilet bowl and HSBC Holdings Plc. predicts that the currency (ringgit) will weaken to 3.5 per dollar at the end of this year *hooray!*. A weaker ringgit against the dollar is definitely good news to people who’re making U.S. dollar before converting it back to ringgit.
There is another “don’t” in the current bearish stock market sentiment – restraint from applying for IPO (initial public offering). While there’s no definite guarantee that your IPO investment will follows the drain chances are high that you would lose your money. Perwaja Steel Sdn Bhd (KLSE: PERWAJA, stock-code 5146) which finished the day as the top loser – lost 42 sen or 17% (closed at RM2.48) over its IPO price of RM2.90 *ouch!* is a good example. Despite the claims that the company which was hit by RM3 billion losses (scandal) in 1996 has turnaround for the better, it couldn’t convince many old timers judging from the low oversubscription of only 1.8 times. At least I’m not convinced. In short the listing timing as well as the company’s background were the main reasons why investors should avoid this stock in the first place.
Sometimes you need to read analysts’ report with a pinch of salt. Hwang-DBS’s target price for Perwaja was RM5.00 a share (6 times FY2009 earnings per share) while other brokerage values the company at RM5.75 per share (7 times FY2009 EPS). If indeed the company could register a net profit of RM452.1 million for FY2008 and RM460.2 million for FY2009 then those who dumped the stocks today must be idiot. In comparison iron and steel companies listed on U.S. are traded between P/E (price per earning ratio) of between 6 to 16 times. Maybe Malaysian’s steel companies worth only half of the lowest P/E company from U.S. Of course you’ve to beware of BRIC’s (Brazil, Russia, India and China) demand for such commodity.
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