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Malaysian Stock Market Crashing – More To Come?



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Feb 27 2007
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Yesterday I wrote about my concern if the “Factors from 1997 Asia Crisis Re-Appears – A Bad Sign?” is something that we should be concern with. If an U.N. official said so, then we should at least think and digest the subject thoroughly, shouldn’t we?
Ignore the political calls and cries asking you as a retail investor to support by participating in Malaysian stock market. Ask Citigroup (NYSE: C, stock) Equity Research to fly kite as well since this research firm always give contrarian suggestion to investors for obvious reason – they want to sell badly after accumulated stocks at lower price. To me, both the political figures and the market makers above belongs to the same group – they’re the fox guarding the chicken coop and asking the little chickens (that’s you and me dude) to queue up entering the slaughtering chambers.
And today what do you get with Malaysian stock market a.k.a. Bursa Malaysia (KLSE: BURSA, stock-code 1818)? A 50 points or almost 4% drop (minutes before closing just now) with a record 1151 stocks down comprises 87% of the total stocks listed on the Kuala Lumpur Stock Exchange. Maybe the government should shout and front-page this record-breaking stock-crash the way they shouted how the good times were back not long ago.
Why am I so happy with the stocks-crash? I’m not, but I’ve to admit I’m glad I listened to my inner voice and my experience gained throughout the years of investing that something is not right about the sudden rush of the goodies. The simplest thing I learned is you have to take contrarian stand with a country’s equity market where the government does not practice transparency. So when the government officials say “you should buy”, you better take the opposite action and “sell instead”. Since when you make money because the government sincerely cares for you that they tipped you to enter the stock market in Malaysia?
You have to remember that EPF (Employees Provident Fund) or PNB (Permodalan Nasional Berhad) or other government-linked agencies need to make money the way you want to in the stock-market. Need I tell you how much money the government needs to organize, conduct and vote-fishing in a general election? Where do you think those mountains of money came from?
Of course the analysts justify the bungee-jump stock performance on Dow-Jones consecutive days of down-trend, overdue correction, profit-taking, oil prices above $61 a barrel, geopolitical factors and other excuses which never fail to amuse me. But I bet they’ll never tell you if the foreign investors are pulling out in a big way. It’s possible the foreign investors who flooded into stock-market recently are short-term investors or speculators. Looking at the trend, it is impressive the retail investors nowadays are deploying a smarter strategy – investing in short-term by day-trading. If indeed the top-volume were played by retails, you can see them run helter-skelter today upon seeing the fox coming.

And did you notice how most of the 20 top-volumes stocks register double-digit percentage of drop? After the closing, the composite index was down 35 points – isn’t it fantastic how the “investors” push-up the index by 15 points within the few last minutes? Of course it’s too early to tell if today’s drop is an early indicator of the stock market crash. Ready for stock short-sell?

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Comments

thanks for the article. i also agree with u.

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