KLCI's record 'abysmal' but could get worse
Published: Mar 10, 2015 11:28 AM | Updated: Mar 10, 2015 12:03 PM
The DAP has warned that the Kuala Lumpur Composite Index (KLCI) will continue its "abysmal" 2014 record if Malaysia fails to address three major financial scandals in the country.
The DAP has warned that the Kuala Lumpur Composite Index (KLCI) will continue its "abysmal" 2014 record if Malaysia fails to address three major financial scandals in the country.
The KLCI's 2014 record, according to DAP secretary-general Lim Guan Eng, shows that it is the "worst performing stock market in Asia Pacific".
He cautioned that this year would see another poor performance if the Malaysian Anti Corruption Commission (MACC) and BN-led federal government are not serious about resolving the RM42 billion 1Malaysian Development Berhad (1MDB) scandal.
The embattled sovereign fund, a pet project of Prime Minister Najib Razak, has been tarnished by heightened allegations of financial mismanagement.
Lim said the government also needs to look into the RM52 billion’missing’ bumiputera shares and the RM13.5 billion Port Klang Free Trade Zone scandals.
Concern over future prospects
Lim, who is Penang chief minister, is not surprised by the drop in Asia-Pacific bourses yesterday.
He attributed it to the strengthening US dollar and US reduced unemployment, making likely an interest rate hike by the Federal Reserve Bank of the United States in the next few months.
"However, Malaysia will suffer disproportionately from a weak capital and stock market despite recording economic growth of between 5.7 to 6 percent last year.
“Malaysia KLCI in 2014 suffered a drop of 5.7 percent, the highest drop amongst all Asia Pacific bourses," Lim said in a statement.
Lim pointed out that even countries like Thailand with lower economic growth rates of barely 1-2 percent in 2014, the Thailand stock exchange index rose by 15.3 percent.
The Philippines, he noted, was a star performer with a rise of 22.8 percent in the stock index last year.
"Why should a country that is supposed to record healthy economic growth rates of nearly six percent last year yet has the worst performing stock market compared to countries like Thailand or Philipinnes with lower economic growth rates?" Lim asked.
"Clearly foreign investors are not interested in historical performance but in future prospects of the KLCI and Malaysia," he added.
Lim said that the 1MDB financial problem raises doubts on transparency and compliance in the capital markets.
He added that Malaysia’s credit ratings would be jeopardised should 1MDB unravel and default.
"For this reason, it is crucial that 1MDB and the Finance Ministry come clean on the whole scandal so that everyone knows the true cost should a worst-case scenario happens," Lim urged
Meanwhile, Lim slammed Najib for suing DAP leader Tony Pua for defamation related to the latter's statement on 1MDB.
"This will not make the problem disappear. Urgent action by a reputable independent body is crucial to restore confidence in our capital markets.
"Or else Malaysia will suffer the indignity of the anomaly and paradox of recording high economic growth and yet have the worst performing stock market in the region," he stressed.
The KLCI's 2014 record, according to DAP secretary-general Lim Guan Eng, shows that it is the "worst performing stock market in Asia Pacific".
He cautioned that this year would see another poor performance if the Malaysian Anti Corruption Commission (MACC) and BN-led federal government are not serious about resolving the RM42 billion 1Malaysian Development Berhad (1MDB) scandal.
The embattled sovereign fund, a pet project of Prime Minister Najib Razak, has been tarnished by heightened allegations of financial mismanagement.Lim said the government also needs to look into the RM52 billion’missing’ bumiputera shares and the RM13.5 billion Port Klang Free Trade Zone scandals.
Concern over future prospects
Lim, who is Penang chief minister, is not surprised by the drop in Asia-Pacific bourses yesterday.
He attributed it to the strengthening US dollar and US reduced unemployment, making likely an interest rate hike by the Federal Reserve Bank of the United States in the next few months.
"However, Malaysia will suffer disproportionately from a weak capital and stock market despite recording economic growth of between 5.7 to 6 percent last year.
“Malaysia KLCI in 2014 suffered a drop of 5.7 percent, the highest drop amongst all Asia Pacific bourses," Lim said in a statement.
Lim pointed out that even countries like Thailand with lower economic growth rates of barely 1-2 percent in 2014, the Thailand stock exchange index rose by 15.3 percent.
The Philippines, he noted, was a star performer with a rise of 22.8 percent in the stock index last year.
"Why should a country that is supposed to record healthy economic growth rates of nearly six percent last year yet has the worst performing stock market compared to countries like Thailand or Philipinnes with lower economic growth rates?" Lim asked.
"Clearly foreign investors are not interested in historical performance but in future prospects of the KLCI and Malaysia," he added.
Lim said that the 1MDB financial problem raises doubts on transparency and compliance in the capital markets.He added that Malaysia’s credit ratings would be jeopardised should 1MDB unravel and default.
"For this reason, it is crucial that 1MDB and the Finance Ministry come clean on the whole scandal so that everyone knows the true cost should a worst-case scenario happens," Lim urged
Meanwhile, Lim slammed Najib for suing DAP leader Tony Pua for defamation related to the latter's statement on 1MDB.
"This will not make the problem disappear. Urgent action by a reputable independent body is crucial to restore confidence in our capital markets.
"Or else Malaysia will suffer the indignity of the anomaly and paradox of recording high economic growth and yet have the worst performing stock market in the region," he stressed.
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