Buy or Sell after Parliament is Dissolved?

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KLSE Market has been waiting for Malaysia’s next General Election date to be announced.

Some indicators might give you an idea when will be the General Election to be held:
1. The Star daily in Malaysia had been told to try and clear their leave in the first half of the year. The editors were expecting the 14th general election to be called towards the second half of the year and all leave on the editorial floor would be frozen if this happened.
2. Parliamentary term is due to expire in August next year.
3. Ringgit’s strong pole position among Asian currencies.
4. National sentiments was arising from the SEA Games after Malaysia wrapped the Games with a record 145 gold medals, 92 silver and 86 bronze.
5. Today, Umno president Datuk Seri Najib Tun Razak has welcomed former Umno vice-president Tan Sri Muhammad Muhammad Taib back to the fold and said that he is expecting great things from the ex-Selangor mentri besar.

If parliament is dissolved, should we sell our stocks on hand or maintain our positions? Though the same incident won’t happen twice but history does give you some precious results and patterns.

Observation:
We can observe that KLCI performance is more highly affected by the global factors. Only in March 2008 when Barisan Nasional encountered an unexpected loss against their oppositions, KLCI had a big loss (-7.21%). However, KLCI had a quick reversal in the next month (April 2008). Hence, we would conclude that macro-enviroment will play the vital part in determining the KLCI’s trend in the long term. Investors/ traders should be calm when parliament is dissolved and hold the stocks that are good in both fundamental and momentum.

Attached below is the comparisons between Dow Jones Index and KLCI Index.

Read more on our previous post Hot Stocks ahead of Election.

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