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tomorrow should warn off all Ministers to stop acting as investment
consultants to talk up the market after the expensive lesson of RM149
billion losses mostly by small investors in the stock market in the past
week after Abdullah’s Chinese New Year advice to enter the market the “ride
on the momentum”
(Parliament, Tuesday) : The Cabinet tomorrow should warn off all Ministers to stop acting as investment consultants to talk up the market after the expensive lesson of RM149 billion losses suffered mostly by small investors in the stock market in the past week after the Prime Minister, Datuk Seri Abdullah Ahmad Badawi’s Chinese New Year advice to enter the market the “ride on the momentum”.
Small investors had overcome their skepticism and reluctance to enter the stock market following the Prime Minister’s exhortation at the Gerakan Chinese New Year open house in Kuala Lumpur on the first day of the Chinese New Year on February 18, 2006 to enter the stock market to “ride on the momentum” of the good economic times on the ground that the Kuala Lumpur Composite Index (KLCI) could surpass the 1,350-point level following positive indicators of the country’s economic growth – namely the trillion ringgit total trade last year, the increasing foreign and domestic investments and the rising ringgit.
In less than a week, small investors who acted on the advice of the Prime Minister and flocked into the stock exchange were badly burnt.
In two days on 27th and 28th February, the KLSE plunged 76.42 points from 1,272.87 to 1,196.45, wiping out RM69.45 billion market capitalization in two days.
It is deplorable that Abdullah, who was visiting Yemen at the time, did not immediately learn the lesson that as Prime Minister and Finance Minister, he should not double up as stock market adviser as he persisted in advising Malaysians “to have confidence and be prepared to invest in the KLSE to attract bigger foreign participation”.
Other Cabinet Ministers have also got into the act to double up as investment consultants.
The Second Finance Minister, Tan Sri Nor Mohamed Yakcob told investors that “there is no cause for concern on the dip in the Kuala Lumpur Composite Index as the national economy remains robust with strong fundamentals”.
The Information Minister, Datuk Seri Zainuddin Maidin said on Sunday that he was disappointed that “the local media played up last week's fall in the Bursa Malaysia stock index”, as such reports ”could set off a panic situation and undermine investors' confidence in the economic position of the country when it was seeing a surge in its performance”.
"Such reports are of no help at a time when the country's leaders, including
Prime Minister Datuk Seri Abdullah Ahmad Badawi, are saying that our economy
is on the right track with strong fundamentals.”
Bursa Malaysia was worst hit in the region in the beating suffererd by Asian bourses yesterday:
Asian bourses Decline
Manila CI 4.54%
Hang Seng 4.00%
Jakarta CI 3.48%
ST Index 3.13%
Shanghai CI 1.63%
In the five trading days from 27th February to yesterday (March 5), the KLCI plunged by 162.18 points from 1,27.87 to 1110.69, wiping out a colossal sum of RM149.11 billion of market capitalization in five days, as illustrated by the following:
Date KLSE decline Market capitalization decline
27.2.07 35.79 pts RM38.38 billion
28.2.07 40.63 pts RM31.07 billion
01.3.07 15.54 pts RM14.84 billion
02.3.07 16.23 pts RM13.30 billion
05.3.07 53.99 pts RM51.53 billion
Total 162.18 pts RM149.11 billion
The Prime Minister and the Cabinet should contribute to enhancing investor confidence in the Malaysian economy and the stock exchange by positive, productive and creative actions and not indulge in empty and irresponsible talk causing small investors to suffer massive losses running to RM149.11 billion in five trading days.
Nobody blame Abdullah, Nor Mohamad and Zainuddin Maidin for causing the stock market “bloodbath” yesterday and the plunge in the previous four trading days, but they cannot shirk responsibility for inducing and misleading small investors to enter the stock market purportedly to “ride on the momentum” of the good economic times.
With the KLCI plunging to 1,110.69 at the close yesterday, it has virtually wiped out all the gains of Bursa Saham this year. It is going to quite a haul to reach the 1,350-pt KLSE which Abdullah had promised only a fortnight ago.
Opposition Leader, MP for Ipoh Timur & DAP Central Policy and Strategic
Planning Commission Chairman
Parliamentary Opposition Leader, MP for Ipoh Timur & DAP Central Policy and Strategic Planning Commission Chairman