Hence something that was 3.60 before the election and now stands at 1.60 looks mighty tempting. But we also know the new paradigm will also means that to get back to the 3.60 is almost inconceivable.
Glory to the risk takers. These counters will have a lot of volatility, downs and rebounds. Rumours and newsflow will be flying like fake news in a thunderstorm of hope and lies. Day traders and prop traders will love these counters, hence beware of getting caught by them.
What Might Happen To Them
- These counters while tainted, are not like BN appointees whom you can just fire. If they are found to be in cohorts with previous government in doing "illegal activities" such as: collusion, bid rigging, over pricing, rebates, unjustified commissions, bribery, circumventing laws or approval processes, cosy monopolies, highly preferential awardment of contracts, etc. Hence construction firms, if hit, will be gravely affected owing to the large sized contracts and.or dependence on certain personalities/unit. The trouble with construction firms is that there is little in ways of differentiation. Most can do most type of construction. Unless you have specific expertise (deep tunneling etc..).. the more you will be at the mercy of the new paradigm.
- There are some counters that have a decent business model going. Even if they were tainted, the business might still be good. To that end, there will be no need to reinvent the wheel, but if the owners are not deemed as "suitable owners" going forward, one sense that these counters may be "persuaded" to sell to a GLC. However, let's not kid ourselves, the price won't be fair or high.
Conclusion
I will stay away from tainted counters till there is a firm hint of change in ownership. Otherwise if you must, treat them as quick punts... and be good at trading.
No comments:
Post a Comment