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(The Star) - Political headwinds seem to have dealt a blow to investors’ confidence in Bursa Malaysia.
The local market yesterday failed to join the regional rally triggered by the overnight hefty gains on Wall Street. Stale bulls were selling on strength, putting pressure on local share prices, particularly plantation stocks and heavyweights. In contrast to the sharp 2% to 3% gains among the regional bourses, the KL Composite Index fell 10.8 points, or 0.9%, to 1,239.6. Year-to-date, the benchmark index had shed 14.2% from last year’s closing of 1,445. It had tumbled 276 points, or 18%, from the record of 1,516 on Jan 11. Apart from the administrative uncertainties after the opposition took control of four additional states, the challenges against the existing leadership in Umno added more uncertainty to the local bourse, which had already been dragged down by the US credit crunch, said analysts. Politics, which was seldom a concern in Malaysia in the past, had ruled local sentiment following the general election last month, analysts said. They added that it was not a surprise that Bursa performed badly yesterday as it was difficult to separate investors' perception of the market and the country. The recent Invest Malaysia Conference held by Bursa Malaysia did not help to whet foreign investors’ appetite for Malaysian stocks. Foreign investors heard from top leaders that the federal government intended to go ahead with many of the federal projects; however, like local investors, they want to see political issues settle down before making their decisions. Plantation stocks succumbed to heavy selling yesterday. Sime Darby Bhd dropped 25 sen to a historic low of RM8.90 since it was floated in November, IOI Corp Bhd lost 10 sen to RM6.70 and Asiatic Development Bhd fell 20 sen to RM7.70. Bursa Malaysia CEO Datuk Yusli Mohd Yusoff said yesterday the current volatility was a reflection of “market forces at work.” ”We have to wait for all these issues (including negative external global factors) to settle down before we can see a bottoming out. We will not intervene. We think the current situation is temporary.'' “Some investment funds believe that the commodity boom is over, so they sold down the plantation stocks. But I’m not prepared to take that view yet. The commodity boom will still go on unless the US slides into a severe recession,” said MIMB Investment Bank head of research Pong Teng Siew. In the region, Tokyo and Hong Kong were the best performing markets. The Nikkei 225 Index soared 533 points, or 4.2% to 13,189.4, while the Hang Seng Index surged 734.9 points, or 3.2%, to 23,872.4 yesterday. Across the causeway, Singapore’s Straits Times Index gained 78 points, or 2.6%, to 3,124.6, while South Korea’s Kospi Index rose nearly 40 points, or 2.3%, to 1,742. “Investors do not like uncertainties. It is better to wait for a clearer picture on the political scene. Also, I don’t think the worst is over on the US subprime loans issue,” said Kenanga Asset Management Sdn Bhd chief investment officer Chen Fan Fai. Aseambankers’ Malaysia Equity Research said the political changes were positive in improving transparency and accountability for the nation. However, it added that they created near-term administrative uncertainties and temporarily derailed the perception that Malaysia would weather the external storm better than most countries. The head of research of a local stockbrokering house said the political risk from the Abdullah administration’s recent electoral showing had yet to be reflected in share prices. He noticed that market volatility rose by four or five times when political uncertainties occurred in April 1987 and September 1998. The policy gridlock could derail the share price performance of government-linked companies and some construction firms until political leadership issues were fully resolved in the fourth quarter, he added. Analysts expect political uncertainties to linger until December when Umno will hold its party polls.
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There are now 82 opposition parliamentarians as opposed to 140 from Barisan Nasional. What is more interesting however, is that there are 67 front benchers (i.e., Ministers & Deputy Ministers), which leaves 73 backbenchers for the Government. That means that excluding the Ministers, who are often absent from Parliament, you may end up with opposition parliamentarians outnumbers those from Barisan Nasional. That should certainly be interesting ;-)
The first session of the 12th Parliament will officially commence on the 28th April (Monday) with the swearing in of the new MPs. The session will last for a month til 27th May.
The second session will be held over 23 Jun to 15 July, while the 3rd and last session for the year will be held between 18th August til 11 December.
My first task at hand is to submit 15 questions (10 for oral replies and 5 for written) to the Parliament secretary for replies by the relevant ministries by the 8th April (next Tuesday).
So for those with key questions of national interest which you'd like me to bring up in Parliament during the question and answer sessions. (Note that the questions should be fairly specific and directed at a particular ministry) ;-)