KUALA LUMPUR – April 19, 2019: The Bursa Malaysia has been dubbed the worst major market in the world so far this year and reportedly in danger of being downgraded under the FTSE’s global classification framework..
Samsung Asset Management Co said that the gloomy outlook for Malaysian stocks is not likely to end anytime soon.
“This will be the theme from May 2018 to May 2020,” said Alan Richardson, a regional fund manager at Samsung Asset in Hong Kong.
In an interview with The Mole, Associate Professor Dr Ahmed Razman Abdul Latiff of Putra Business School said the government needs to view the situation seriously, especially if it persist for a long period.
“If our market performance continues to be bad for say, a year or more, investors would start to shy away and companies will find it more and more difficult to sustain, ultimately leading to lay-offs and such that will affect us normal citizen.
“That is why the government has to look at this seriously and start reforming the monetary system and introducing policies that can help our local companies,” he said.
Ahmed Razman, nonetheless said there are always two sides of the coin on the current situation affecting the performance of Bursa Malaysia.
“Current investors will take it as bad news since they cannot sell off their investments without making losses but on a positive note, there are now more opportunities for potential investors to buy some of these shares at much lower prices.
“We must understand that our stock performance can be influenced by investor sentiments even though fundamentally these companies are still profitable and have potentials to grow.
“So, if the government can manage these sentiments by tackling the root cause of this economic problem such as reforming the monetary system, eventually investors’ confidence will go up again,” he said.
Elaborating further on the need for a ‘just monetary system’, Ahmed Razman suggested that the current monetary system allows uncontrolled credit creation through the lending practises by commercial banks which eventually caused the ever increasing cost of living.
“They lend money by creating credits out of nothing, and this will create higher demand than supply and ultimately hike up prices of goods including house prices,” he added.
Another analyst, Professor Dr Faridah Hassan of Universiti Teknologi Mara pointed out that the current poor performance of Bursa Malaysia could probably due to the public accusations against the former Barisan Nasional government.
However, she believes that Malaysians should not be too worried since the country’s bond market is “very deep”.
“In fact, it’s one of the deepest in Asia and any kind of volatility can easily be absorbed by real money fund in Malaysia. So, normal citizens shouldn’t be too worried about the speculation,” said Faridah.