Election boost for Sarawak timber, oil stocks

A quick check shows that Sarawak stocks have run up quite a bit since last month, including Rimbunan Sawit, Jaya Tiasa, Cahya Mata, WTK, Dayang Enterprise, Hock Seng Lee, Ta Annand Coastal Contract.

Elections in Sarawak will help boost the share price of timber and oil and gas companies from the state, though analysts say that the outcome of the election itself could be a major driver for the equity market here.

"If the ruling party wins big in the election, market anticipation of a general election will drive up the market," said a dealer, adding that extensive speculation of a general election could add anywhere between 100 points and 150 points to the 30-stock benchmark FBM KLCI index.

In the immediate term, analysts say that timber stocks could get an uplift from the election news.

Already, timber stocks are on an upsurge due to anticipated demand for the lumber from Japan, which has been hit by an earthquake and tsunami.

Japan imported nearly 1.2 mi-llion cubic metres of panel pro-ducts worth RM1.7 billion in the 11 months ended November last year, representing almost half of Sarawak's total exports, AmResearch wrote in a March 11 report.

"The retail play for the Sarawak elections could well be in timber," said a dealer, adding that even before news broke out that the Sarawak legislative was going to be dissolved, timber stocks were already active in price movement and also in volume.

A quick check by Business Times shows that Sarawak stocks have run up quite a bit since last month. Among the stocks that have made respectable gains since February 4 are Rimbunan Sawit Bhd (up by 37 per cent to RM2.03), Jaya Tiasa Holdings Bhd (up by 90 per cent to RM5.44), Cahya Mata Sarawak (up by 45 per cent to RM2.59), WTK Holdings (up by 43 per cent to RM1.58), Dayang Enterprise Holdings Bhd (up by 8 per cent to RM1.97), Hock Seng Lee (up by 50 per cent to RM1.77), Ta Ann Holdings Bhd (up by 24 per cent to RM5.73) and Coastal Contract (up by 30 per cent to RM2.63).

Those, however, intending to try their luck on Sarawak stocks as an election play, should take stock what OSK Research said last month.

The firm said that past research showed that stocks did indeed outperform six months and three months before the polls but underperformed three months after election. "Investors can consider riding on this election play but we advise that they lock in gains on Nomination Day, which is usually one to two weeks before the actual polls," OSK said. - By Goh Thean Eu and Francis Fernandez of btimes.com.my