Feb 18, 2013

Could Parliament Dissolution Coincide with the Electoral Roll Gazetting this Friday?

While everyone is hopeful that the return of investors post-CNY break will induce more interest in the local equity market, speculation about the dissolution date of Parliament and the eventual 13th general election will continue to act as a wet blanket in the weeks to come.

Talk has been circulating widely that this Friday,  which coincides with the day the Election Commission (EC) will send the new electoral roll with 13.3 million new voters to be gazetted, could be D-day for dissolution.

While the dissolution dates of Parliament and the state assemblies are the prerogatives of the prime minister, and the menteri besar and chief ministers respectively after obtaining consent from the king and the respective state rulers, the decision on the day for voters to choose the country's government for the next five years actually lies in the hands of the EC.

Only the EC has the legitimate power to decide on the polling date and elections have to be called within 60 days after dissolution. With the EC chairman making it clear that there will be no separate election days for state and parliamentary seats, investors and businesses can take comfort that there will not be disruptions even if the Selangor government is dissolved ahead of others, as earlier hinted to by the menteri besar.

Sell-on-strength, but Opportunities Abound
It is a no brainer that share prices of government-linked companies would be volatile prior to dissolution and could fall post dissolution. While investors are advised to unload on any rally and reenter post dissolution, it could be a good time to pick up fundamentally solid companies with good growth potential and able management as any short-term hiccups will not derail the long-term direction and vision of these companies.

by TA Securities