Malaysia Strategy:Looking past the election distraction

Barring unanticipated changes in underlying expectations of a settled electoralredelineation exercise and three-way contests, our base case outcome for thegeneral elections (GE14; likely March/April) is continuity re the ruling BarisanNasional coalition. With manner of the victory potentially having repercussionsre post-GE14 policy direction, investors should use pre-GE14 market volatilityto optimise positions for the long game, favouring sector dominants (AirAsia,Inari, Top Glove) and value GLCs (Tenaga, Telekom); we note positioned-forthe-LT laggards (SP Setia, Gent(M), MAHB) and advise cutting weightings instructurally-vulnerable erstwhile market leaders like Gamuda, DiGi and PETD.

Favoured sectors are banks (CIMB, HL Bank, RHB), construction (AQRS,Econpile), exporters (Inari, Top Glove) and transport/logistics (AirAsia, POS).