[sangkancil] The Prime Minister's Don Quixotic tilting at the KLSE windm

[pillai@mgg.pc.my (M.G.G. Pillai)]

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Given the prolific public statements from the mouth of the prime
minister, Dato' Seri Mahathir Mohamed, about the state of the
world and the Malaysian economy, one should look at some of his
statements rather more closely than it is.  His investment
"advice" is foolish to say the least.  Especially yesterday, when
he wants Malaysians to come in and support the market to prevent
"manipulation" by those dastardly foreigners.  When the share
market was on the way up, there was no need for such "advice"
since, as lemmings, we need no help to self-generated suicide. 
Lemmings only act in herds.  But our investors have been badly
bitten, and leave the market in droves.  Nationalistic they may be,
but not if it means losing money.  And losing money is the one sure
prospect of anyone venturing into the stock market today. 

     Market sentiment is horribly bearish.  What goes up must come
down, and what happens today is the reaction to years of manipulated
stock price rises.  The KLSE rules are all but manipulated regularly
to boost volume and share prices, yes, the same manipulation the
prime minister says the foreigners do as a matter of course.  (If
that is wrong, why are we following the herd?)  When bearish
sentiment prevails, these rules cannot help improve either prices
or volume or both.  The KLSE, as far as I can gather, is dominated
by the small investors who panic when market sentiment turn
bearish. But the panic invariably began with the "big boys". On the
KLSE it began when the foreign funds, which at one time we welcomed
with open arms, withdrew after a healthy profit. And the lemming
mentality took over.  I am told that if we take Malaysia's 50 of
the most prominent pre-bearish market sentiment, they collectively 
would probaby owe the banks a total of a billion ringgit and more. 

     So the prime minister's comment on the intrinsic health of
the stock exchange is equivalent to the hot air generated by
politicians.  His attacks on foreigners for the problem we have, and
justifying the rule changes on grounds that foreigners do so
with alacrity misses one important point: The examples he quoted to
reporters yesterday in which he said Malaysia was shortchanged is
not quite correct.  Let a company, not necessarily foreign, try to
take control of a major Malaysian company by concentrated buying on
the stock exchange and I dare say the Securities Commission would
react as the London Stock Exchange did in the Guthrie's affair. The
London Metal Exchange rules were changed in 1981 when Malaysia
attempted to corner world tin stocks;  as a result, she lost about
US$2,500 million.  Ivan Boesky and Milliken were jailed not for their
dealings in junk bonds -- Malaysia has them too, and one does not
know when the roof on that would collapse -- but for breaches of the
rules after greed ruled their tradings.  If the Securities Commission
is serious about its role, I dare say that several of our leading
stock broking firms would contribute officers to the stock exchange
corner at Kajang or Sungei Buloh prisons.

M.G.G. Pillai
pillai@mgg.pc.my



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