5 Stocks That Might Be Affected By The New Malaysia Government

A new dawn is beginning in Malaysia. That is the spirit in the air. The opposition (now government) coalition has finally succeeded in winning the vote of the people to force, the incumbent out of office after 61 years.

It was a major upset for the previous government but also an interesting development for investors in the country. With a new government would come a new set of policies and objectives. What does it all mean for investors in the country?

Today, we dig out 5 stocks that might be negatively affected by the new Malaysia Government.

Large Major Projects

The new government has accused the previous government of using Special Purpose Vehicles (SPV) to hide some expenses with regards to many mega projects including the MRT, LRT and High-Speed Rail development.

One of the Manifesto of the government is to get the budget of the country up to shape again. That could mean a review of all the major projects happening now in Malaysia. If that happens, that could be a significant impact on companies that are greatly tied to these projects. One such company is the construction giant, Gamuda Bhd (KLSE: GAMUDA). As one of the lead contractor in all the development of the MRT, Gamuda Bhd is greatly dependent on the project as the key growth factor of the company. Without it, Gamuda could be facing a much dimmer prospect going forward.

The Monopoly

In the government’s manifesto, they have stated that they will review all monopolistic business arrangement, singling out Astro Malaysia Holdings Bhd (KLSE:ASTRO) as an example. The pay-TV and multimedia company is already facing structural challenges from new digital media and streaming TV competitor. If the government were to review their business for monopolistic practices, that could spell trouble for the company.

The Press

The news press has long been used as a weapon to keep the current government out of power. The new government has promised freedom of the press and we are already starting to see journalists being more open with their reporting over the past few days.

However, two of the most read news media are actually directly owned by the current opposition parties. Utusan Melayu Bhd (KLSE: UTUSAN) and Star Media Group Bhd (KLSE:STAR) are owned by UMNO and MCA, the (current opposition) Barisan National component parties respectively. Will the two press be left alone as well? That is still an unknown to investors. Combining with the dim prospect of print media, the two companies might not be having a great time going forward.

The Toll Operator

Lastly, one of the manifestoes of the current government is also to look into abolishing toll charges in stages. It is unclear how current toll operator will be compensated if at all. Companies like Lingkaran Trans Kota Holdings Bhd (KLSE:LITRAK), or LITRAK for short, could be facing an uncertain future.

LITRAK is currently the operator of the Lebuhraya Damansara-Puchong Highway (LDP) and the SPRINT Highway, both heavily used toll roads in the Klang Valley area.

What Does The Future Hold?

This question is not only in all Malaysian’s minds at the moment, it is in all companies’ operating in Malaysia as well. For some, it might mean a new and positive beginning, a hopeful future. For others like the 5 companies above, it could mean something less desirable.

Whatever it might be, it will not be boring.

If you are just getting started in learning about investing in the Asian Stock Market, we have created a full 15-Video Course for you to help you get up to speed on how to look for great investments in Asia. Click here to find out more.

Stanley Lim, CFA

Stanley Lim has spent the last decade in the investment industry. Over the course of his career, he has kick-started a few businesses, worked in the family office industry and most recently in the investment advisory industry. He has been a writer and analyst for The Motley Fool Singapore from 2013 to 2017. He has written close to 2000 articles online, on investment education and market analysis. He is the co-writer of the investment book: “Value Investing In Asia”, published in 2018. Stanley is currently the chief editor of Value Invest Asia.

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