Malaysian stocks have been rallying since the start of April thanks to the huge technical recovery on Wall Street, not because of Prime Minister Najib Razak’s ascension to the top job in the country, nor because of the newly announced cabinet.
“I have been asked this question many times but it is important to get the facts correct because retailers are involved and we have to be responsible and not mislead them,” PHS Lim, president of the Malaysian Investors Association told Suara Keadilan.
“The very strong gains of the past few days have been due to the US market which rallied because of a huge US$8 trillion stimulus package being pumped out across the world and because global interest rates are now nearly touching zero. It is this sheer amount of liquidity and access to cheap funding that are fueling the worldwide rally.
“Malaysia is only just playing catch-up. In fact, the political uncertainty is still weighing on our local market, which has not gone up by as much as say, Hong Kong or China, only about a third of the recovery recorded in these big markets.”
Back to bad old days of flattery and manipulation?
On Friday, a week after Najib formally took over from Abdullag Badawi as the country’s sixth prime minister, the Kuala Lumpur Composite index jumped 2.56 percent to 941.38 points.
Government-linked fund managers and institutions were spotted leading the push, snapping up blue chips and other heavyweights.
“We are happy to see the market come to life again but it looks like this is another attempt by the powers-that-be to curry a bit of favour with the new PM, or maybe they were instructed to do so,” said a dealer at a large brokerage.
“But this is not good practise, not transparent, not real. If the international markets sink again, then our Khazanah, EPF, PNB will again be left holding bad bets. Ultimately, Malaysian workers and taxpayers lose - after all, it is their money that is being invested.”
The US market was closed for the Good Friday holiday, but the Dow Jones index shot up 3.1 percent on Thursday, buoyed by news that financial group Wells Fargo expected about US$3 billion in first-quarter profits - an early sign of recovery in the battered global banking sector.
According to Lim, the worst was not over for equity markets, and in Malaysia, he estimates the trading range for the KLCI this year remains between 750 to 1,000 points.
“We are still headed for volatility. Stocks always react ahead of the real economy. What Najib and his cabinet must do is to focus on retrenchments. The figure will easily come up to 800,000 over the next two years despite the much lower official data,” Lim said.
“A lot Malaysians don’t report, there is no welfare system here, so why bother? But high number of unemployed will create a huge negative down-spiral in the real economy - that’s the danger.”
Market rise cannot sustain without long term structural changes to economy
The scandal-plagued Najib - regarded as “Mr Status Quo” by many political and market analysts for his lack of political and economic vision - assumed the most powerful position in the country amidst huge unpopularity and controversy.
Despite announcing a giant RM60 billion stimulus package - which when stripped down, amounted to only less than RM20 billion of direct injections spread over two years - he did not introduce any long term structural reforms. Analysts believe these are essential to get foreign money back into the country again.
“If you’re based in London or in the US, I don’t think you’d be looking at any of the smaller countries like Malaysia for the time being,” said Jalil Rasheed, head of equities at Aberdeen Asset Management Malaysia.
Najib’s newly unveiled cabinet was also widely regarded as a disappointment, containing a host of ‘old faces’ - politicos who had lost their seats due to voter rejection. Six were made senators in order to get them on board his 28-member cabinet.
His minders have launched a massive public relations campaign to try to mask his unpopularity and the fact that he brings nothing new to the table. Rumours have been spread that a proposed high-powered Council of Economic Advisers will contain big names in a bid to take the flatness off his limp cabinet detailing.
But so far, there has been little enthusiasm that any of the speculated appointees could do much to change Malaysia’s economic direction.
According to the analysts that Suara Keadilan spoke to, reforming the system will require huge political will and if the politicians themselves could not do this, how could an advisory panel do better?
“I don’t think any type of council will be able to help. Our economy is too trade dependent on the external markets. What can we do in the short term? It is long term structural changes that are need,” said Lim.
“We need to lift our competitiveness and re-look our whole economic structure. This is not just about giving advice, you need to pass laws in Parliament to make real changes. Are our politicians ready to do that?”
Suara Keadilan
11/04/09
“I have been asked this question many times but it is important to get the facts correct because retailers are involved and we have to be responsible and not mislead them,” PHS Lim, president of the Malaysian Investors Association told Suara Keadilan.
“The very strong gains of the past few days have been due to the US market which rallied because of a huge US$8 trillion stimulus package being pumped out across the world and because global interest rates are now nearly touching zero. It is this sheer amount of liquidity and access to cheap funding that are fueling the worldwide rally.
“Malaysia is only just playing catch-up. In fact, the political uncertainty is still weighing on our local market, which has not gone up by as much as say, Hong Kong or China, only about a third of the recovery recorded in these big markets.”
Back to bad old days of flattery and manipulation?
On Friday, a week after Najib formally took over from Abdullag Badawi as the country’s sixth prime minister, the Kuala Lumpur Composite index jumped 2.56 percent to 941.38 points.
Government-linked fund managers and institutions were spotted leading the push, snapping up blue chips and other heavyweights.
“We are happy to see the market come to life again but it looks like this is another attempt by the powers-that-be to curry a bit of favour with the new PM, or maybe they were instructed to do so,” said a dealer at a large brokerage.
“But this is not good practise, not transparent, not real. If the international markets sink again, then our Khazanah, EPF, PNB will again be left holding bad bets. Ultimately, Malaysian workers and taxpayers lose - after all, it is their money that is being invested.”
The US market was closed for the Good Friday holiday, but the Dow Jones index shot up 3.1 percent on Thursday, buoyed by news that financial group Wells Fargo expected about US$3 billion in first-quarter profits - an early sign of recovery in the battered global banking sector.
According to Lim, the worst was not over for equity markets, and in Malaysia, he estimates the trading range for the KLCI this year remains between 750 to 1,000 points.
“We are still headed for volatility. Stocks always react ahead of the real economy. What Najib and his cabinet must do is to focus on retrenchments. The figure will easily come up to 800,000 over the next two years despite the much lower official data,” Lim said.
“A lot Malaysians don’t report, there is no welfare system here, so why bother? But high number of unemployed will create a huge negative down-spiral in the real economy - that’s the danger.”
Market rise cannot sustain without long term structural changes to economy
The scandal-plagued Najib - regarded as “Mr Status Quo” by many political and market analysts for his lack of political and economic vision - assumed the most powerful position in the country amidst huge unpopularity and controversy.
Despite announcing a giant RM60 billion stimulus package - which when stripped down, amounted to only less than RM20 billion of direct injections spread over two years - he did not introduce any long term structural reforms. Analysts believe these are essential to get foreign money back into the country again.
“If you’re based in London or in the US, I don’t think you’d be looking at any of the smaller countries like Malaysia for the time being,” said Jalil Rasheed, head of equities at Aberdeen Asset Management Malaysia.
Najib’s newly unveiled cabinet was also widely regarded as a disappointment, containing a host of ‘old faces’ - politicos who had lost their seats due to voter rejection. Six were made senators in order to get them on board his 28-member cabinet.
His minders have launched a massive public relations campaign to try to mask his unpopularity and the fact that he brings nothing new to the table. Rumours have been spread that a proposed high-powered Council of Economic Advisers will contain big names in a bid to take the flatness off his limp cabinet detailing.
But so far, there has been little enthusiasm that any of the speculated appointees could do much to change Malaysia’s economic direction.
According to the analysts that Suara Keadilan spoke to, reforming the system will require huge political will and if the politicians themselves could not do this, how could an advisory panel do better?
“I don’t think any type of council will be able to help. Our economy is too trade dependent on the external markets. What can we do in the short term? It is long term structural changes that are need,” said Lim.
“We need to lift our competitiveness and re-look our whole economic structure. This is not just about giving advice, you need to pass laws in Parliament to make real changes. Are our politicians ready to do that?”
Suara Keadilan
11/04/09
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