Tuesday, January 04, 2011

What to expect in 2011

Expectation of a general election is the catalyst to a bullish 2011. Small-cap and mid-cap stocks are likely to narrow the gap of price between them and the big-cap blue chips.

The Government Transformation Plan (GTP) to mitigate corruption and crime is of prime importance. If this major plan can be carried out with firmness, fairness and transparency, much can be achieved. Foreign funds are more likely to come in and keep on coming in.

The other major plan is the Economic Transformation Plan (ETP) which is meant to boost private sector investment and transform Malaysia into a high-income country. The success of the ETP depends on how well the GTP is implemented.

Corruption in any country is hard to curb; crime is in the same category. If the GTP is successfully carried out, undesirable activities, such as illegal gambling, gangsterism snatch thieves and prostitution will be greatly curtailed. This will create a clean and peaceful environment for the country that is a priority to conducive to good living.

Merger and Acquisition (M&A) is the other catalyst that is likely to spur the market to greater heights. The government is encouraging this. Expectation is high in this activity and many M&As will come on stream as the year progresses.

Malaysia is lucky that it is relatively safe from natural disaster. It is also endowed by Mother Nature with abundance of fresh water, clean air, arable lands and useful commodities.

There is no reason why it can't be as prosperous as Singapore. With the right approach, 2011 should turn out to be a Super Bull in motion.