The Star Online: Business
The Star Online: Business |
- Confidence in Malaysian stock market
- Election is not reason to sell stocks
- Who will take over as MSWG chairman?
| Confidence in Malaysian stock market Posted: 05 Apr 2013 05:56 PM PDT SO, the wait is over. And for many, there is not only more clarity for making decisions at work, but also for the decisions in their personal lives. I'm talking about Wednesday's long-awaited announcement on the dissolution of Parliament. With an idea of when the elections would finally be held, most can now plan their workflow, events and even vacations. Given the months of waiting, it was certainly some form of music to the Malaysian ear. Businessmen, media practitioners, everyone in fact, have lived with bated breath for the past six months and have heaved that sigh of relief now! No doubt, many people have grown indifferent to the situation, adopting a "come as it may" attitude. This is only because whatever happens, whenever it happens, the show must go on. For many businessmen, they acknowledge that business has to continue and what they have to take into consideration is how to manoeuvre through the political climate in Malaysia. It's no news that politics and business often affect each other in any country but what I found comforting about business leaders are those who keep their eyes on their game despite the clamours and debates going on. The long wait, however, would have also given time for the public and the market to prepare themselves for the 13th general election so much so that when the market took a 53-point plunge on Wednesday morning upon hearing that Prime Minister Datuk Seri Najib Tun Razak was going to dissolve Parliament, it recovered steadily back into the black in the hours before its close. As the market is reflective of what investors feel, clearly, investors seemed ready to bounce back. The upward momentum in the market in the past two weeks has been strong, and the announcement has shaken things up too much. The following day, the FBM KLCI remained resilient. In fact, it closed nearer to the 1,700 psychological mark which market watchers have pointed to this whole week. In MIDF Equity Research's April 1 report on fund flows, it noted that foreign funds are interested in Malaysian equity. "Foreign investors were in the market buying every single day last week. Buying momentum was extremely strong with net absorption exceeding RM300mil a day from Monday to Thursday," it said. Year-to-date, foreign investors have already bought RM9bil net of Malaysian equity compared with RM13.7bil in 2012. "Foreign participation rate also stayed elevated last week. Average daily gross purchase and sale was RM1.08bil, the fourth week in a row that it had exceeded RM1bil." MIDF said these are "positive overtures for Bursa Malaysia". Locally, retail investors and funds have been taking profit. MIDF said that while the retail investors had remained net sellers, local funds had offloaded RM1.94bil net, among the heaviest selldown on record. Although local investors appear more wary, it looks like foreign funds are not and that should signal ample belief in Malaysian stocks. |
| Election is not reason to sell stocks Posted: 05 Apr 2013 05:56 PM PDT THE showdown has began for what will be the most keenly watched general election in recent history. The dissolution of Parliament and all state assemblies except for Sarawak will mean that Malaysians will get to vote for the federal and state representatives at one go. With so much posturing by both sides of the divide prior to the dissolutions this past week, the stock market reacted the way it's always done. The old axiom of sell on news was on full display Wednesday when profit-taking sent the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) sharply down by 53 points, or 3.4%, after news spread that Prime Minister Datuk Seri Najib Tun Razak was going to announce the dissolution of Parliament. That sharp drop, however, was all erased by the end of the day. The FBM KLCI recovered to close up 0.4 points at 1,685. The market has since been choppy, although on an uptrend, and trading volumes illustrated that. Volume spiked to 1.35 billion shares on April 3 and has slowly tapered off since. Trading volume was 974 million shares yesterday. In 2008, the stock market fell by nearly 9% between the dissolution of Parliament and polling day, The situation was compounded by another big event lurking over the horizon at that point which was the impending global financial crisis. Global economic weakness made matters worse and it took sometime for the stock market then to recover the sell off that took place after the results of the 2008 general election was announced. The political tsunami was a shock for the market with many investors taking time to digest the repercussions of what that election results meant. That and global weakness had sent the stock market down to a low of 829.41 points on Oct 29, 2008. The reaction of the market post the 2008 election was somewhat of an anomaly. Based on a report by CIMB which produced a table showing that since 1982, the stock market three months after a general election has been up an average by 6.2%. A year after a general election, the stock market is up by an average of 16.7%. Those statistics make me wonder if selling stocks ahead of a general election is the right strategy. I remember the Asian Financial Crisis when an analyst told me that Petronas bonds were trading at a yield of 20% because investors were fearing the worst. We know the companies in the country. There was no way Petronas would go belly up and anyone who bought those bonds or even shares of blue chip listed companies back then at depressed prices would be sitting on a fortune today. The thing is that life goes on despite the election results. Factories will still be producing goods for their customers, banks will be lending money, plantations will be harvesting oil palm, restaurants will still get their usual business and department stores will still see people walk through their doors. The same thing played out months after the 2008 election and after the worst of the global financial crisis had hit. After reaching that low of 829.41 on Oct 29, 2008 the market has since gone on a bull run. On Thursday, the FBM KLCI hit an intraday all-time high of 1,700.55, and part of the reason for the bullishness in equities was the growing economy, liquidity and also reaction investors, both foreign and local, have towards the economic transformation taking place in the country. There is more vibrancy in the economy today and the most important thing is that the recipe that has helped push progress in Malaysia should continue. And maybe investors should think twice before deciding on how to act during this general election period. Acting business features editor Jagdev Singh Sidhu wishes he could turn back time when it comes to investing. |
| Who will take over as MSWG chairman? Posted: 05 Apr 2013 04:44 PM PDT PETALING JAYA: As long-standing Minority Shareholder Watchdog Group (MSWG) chairman Tan Sri Abdul Halim Ali steps down, the attention has turned to who might succeed him. One name that is being bandied about is Tan Sri Azlan Zainol. However, this could not be confirmed at press time. Since being established in 2000, MSWG has had two former Employees Provident Fund (EPF) chiefs in its chairman position. Halim was EPF chairman when he assumed the post at MSWG. Before him, Tan Sri Sallehuddin Mohamed was also EPF chairman. Sallehuddin served as MSWG chairman for about a year. EPF was a prime mover of MSWG in the early days. This suggests that the company could be looking at a candidate of similar stature to fill in the big shoes. Note that outgoing EPF chief executive Azlan would remain an ex-officio of the national pension fund board. A source close to the matter said the board would be deciding on the incoming chairman within a month. "The person has to be knowledgeable about governance issues," the source said, adding that "he needs to have integrity, that is a given." The source pointed out that while the board would have the ultimate say in who would be appointed, MSWG's substantial funder, the Capital Market Development Fund, had the opportunity to voice its opinion on the candidate. Another source close to the company said MSWG was likely to get a candidate from outside because its long-serving director, Tan Sri Lodin Wok Kamaruddin, was already involved in several public-listed companies via his position as chief executive in the Armed Forces Fund Board or LTAT (Lembaga Tabung Angkatan Tentera). The source said Lodin, who has been with the MSWG board since 2001, would be busy with corporate work, and that his position could create a conflict of interest if he became MSWG chairman. Outgoing chairman Halim was the founding member of MSWG. He retired from his position of 12 years at MSWG's 12th annual general meeting on Thursday, in line with the company's policy. Prior to MSWG, he was the chief secretary to the Government from 1996 to 2001 and was involved in improving the efficiency of the Malaysian civil service. He also played a part in ensuring government decisions and directives were properly implemented by all government agencies, in line with creating an electronic Government. |
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