Interview With Zico : Malaysian Election Trade Ideas

03/04/2013 by

Hot off the press and within an hour of having a coffee with Zico (not his real name) at Adam Road hawker centre, PM Najib Razak of Malaysia dissolves parliament. Surely that is a sign.

I went for a coffee with Zico, who was supposed to be a regular blog contributor, this morning to hear about his latest venture – a SGD Total Return Fund, domiciled in Singapore and to be run by Zico and his mate, two former huge names in the local fund management scene, having won numerous Lipper awards in years running.

Setting up a fund is not easy, getting investors, relatively hard as well, particularly if you are not operating under the umbrella of a bank which goes to show that banks do not always sell the best stuff ?

The conversation drifted to Malaysia, where Zico and his mate were based for the past few years, making a credible waves into the marketplace there.

Strange as it sounds, Zico is the first person I met so far who is actually Upbeat ? about the coming elections.

His insights are these.

Pessimism over BN’s majority has been more than priced into the markets, evidenced by Malaysia’s KLSE lagging its neighbours this year.

His observations are that the PR (Pakatan) folks do not sound confident of a victory within their ranks, with even a few stragglers who believe it is a personal vendetta of Anwar’s against Dr M. Thus, Dr M cannot have PR come into power at all costs. (Rumours that the Dep PM pays a weekly housecall to his home).

Shares of Petron Corp (Philippines) has rocketed 43% this year since their joint venture with Dr M’s son on the Malaysian service station venture (have not followed up on this).

Fund inflows have been strong with only the locals selling – locals who are afraid of losing power and clout.

Thus the conclusion that a narrow enough margin of victory within 55% for the National Front will be bullish for stocks.

He does not recommend playing the politically connected penny stocks (so much for my Symphony House suggestion). His suggestion was CIMB (current price 7.61), SP Setia (current price 3.3) and, emphasising the yield play,KLCC (current price 6.66).

Chart of CIMB share price.