Dear all, this is my 3rd commentary in 1 week. The last time I wrote so many commentaries in a span of a week was during the panic / massive selloff of Glove stocks between end August - September. This time is because this past week is probably the biggest week of the year packed with all major events globally and domestically.
I am not a Guru, not a Sifu, but I am an objective financial writer. I believe readers who have read my writings would agree I share my opinions on matters from a macro view down to the specific stocks with integrity. The most important trait of being a writer is to be responsible for what you write. What you write must be consistent and can be validated. Also you must walk the talk. With that your reputation will be one that is honest, accountable and transparent.
I have written many times in the past year that I do not believe Glove stocks should be subjected to windfall tax, as it is not a commodity like Palm Oil and Oil & Gas. The mechanics will not work because glove companies manufacture various kinds of products and gloves with different classification across. In addition, Glove companies DO NOT receive subsidies unlike commodities. Furthermore, the Government through corporate income tax would benefit greatly from any supernormal profits. That would make the most sense in terms of revenue collection. Otherwise, being selectively arbitrary to target private sector companies that are doing well is anti-capitalistic / interfering with free market economics. This would attract negative repercussions as it does not instil confidence of investors in your financial markets. Ant Financial's IPO last minute suspension by Chinese regulators should serve as a stark reminder. Therefore, I will reiterate here that Glove stocks should not and will not be subjected to windfall tax in Budget 2021. Any irrational selloff should be a window of collection. If indeed it happens, it would be morally unconscionable as government around the world are supporting and giving incentive to the healthcare sector in the fight against Covid-19, not otherwise.
With regards to the overall Budget 2021, it will be one of the most expansionary budget (fiscally) as the government have been given the mandate to resuscitate the economy at all cost due to Covid-19 pandemic. Politics aside, all parliamentarians would want a budget that can help the people and the economy.The Government also have the approval from earlier August 24th Parliamentary session to raise debt ceiling to 60% for this fiscal policies. If the Budget 2021 meets or exceeds expectations, it will spur a broad based relief rally across all sectors, not only glove stocks.
Lastly, after 2 days since US Election day, the final results are still in tabulation due to record voting and mail in ballots. As per my earlier forecast, Biden will win and squeak past Trump. A Biden win is the return to normalcy / normalisation of global politics, economics and rebuilding of foreign diplomatic relationships between nations. If Trump concedes and dont drag it out with court case, it will be best for everyone. Otherwise, any irrational selloff is a buying opportunity. I have said this as well through the week. My screen shot below shows my recent buy call for my private subscribers during the irrational selloff through the week.
I am human and subjected to fallacy as well. Mistakes are common but I believe what I have written so far is unlikely to be wrong. All the best.
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Food for thought: