22 June 2009

Iskandar Malaysia - PAS-UMNO gaining on unity talks Analyst

Vincent Khoo, CFA Tel: (603) 2143 1180

Events
In a change of heart, PAS spiritual leader Nik Abdul Aziz has agreed to unity talks with UMNO, but with conditions. He said he could accept a unity government but it should be pursued through a proper channel, and the talks should focus on Islamic and not Malay issues (The Star).

Impact
While unity is potentially a long term positive, the market is likely to impute higher near term political risk premiums, given the dissension within the existing coalitions Pakatan Rakyat (unity talks opposed by DAP and PKR), and even within Barisan (this morning Sarawak United People's Party).

Lower intermediate term upside for KLCI should political uncertainties persist. Recent events, including last week's remarks from the Johor palace which at least temporarily dampened the play on Iskandar Malaysia, will limit the sustainable upside of the KLCI to perhaps 13-14x PE multiple, versus historically 15x. Based on this assessment, our 12-month KLCI target would be 1,000 to 1,080.

Best regards
Vincent Khoo, CFA

Nota:
Diatas adalah antara email yang aku dapat setiap hari dari Affin Investment Bank

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