Stock Market Bull – A Feel Good Factor For General Election?

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Feb 12 2007
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I’ve asked this question before and I’m going to ask you again. Did you make money from the current so-called bull-run in Kuala Lumpur Stock Exchange? And I meant lots of money, not just a couple of hundreds from your thousands of ringgit portfolio. Or maybe I should ask from the other angle – did you ever make money from contra-play? Why would I want to ask in such a weird way? Reason being during the 1993 super-bull, tons of people on the street from professional investors and analysts to vegetable sellers is making money from contra-play. It was T+7 all right and now it’s T+3 but it doesn’t matter because everyone was making money from stock market. If you use the composite index and volume as barometer, current index is not far from the 14-years ago bull and the current volume has exceeded 1993 volume.
I still believe the current bull is artificial. If it’s artificial, there could only be one explanation – the government of Malaysia is behind it. Do I have to explain more on how the government managed to push up the composite index? And if the government is the culprit, there could only be one reason – the “General Election” is happening this year.
In fact the preparation for the election was already on the way since fourth quarter last year when the bumpy and ugly roads were given cosmetic treatment – the first sign of coming general election in Malaysia. Then this year you heard good news after good news being splashed across all the media. Even Reuters picked up the sensation and the feeling of a snap poll this year.
Amongst the good news being trumpeted by government-controlled media includes:
  • Record 2006 trade volumes
  • Skyrocket stock market composite index
  • Stronger ringgit
  • Rising Foreign Reserve
  • Feel good factor stories sung by ministers again and again

Asides from the media propaganda, men on the street can tell that the real economic situation is not that rosy. Inflation due to the fuel-price hike has taken much of the toll. People who used to drive to work have opted to ride on motorcycle instead. People are tightening their belt – you will noticed the Carrefour has not attracted the crowds it used to get during the weekend last minute shopping before the Lunar New Year celebration which is less than a week away.

Jobs are not abundance and employees are preparing for the worst – job-cuts, no bonus or no pay increment at all. Without many jobs around, people are not spending as luxurious – car sales are not registering good booking either. Property sales are sluggish except those in the less than $200,000 ringgit bracket and even this type of property buyers are mainly first-timer.

If the government were to announce more goodies such as pay-rise for civil service and a fuel-price revision at a later stage, then it’s pretty much confirmed the general election is around the corner. So what should you do with the current 10-year high stock composite index? Sell your old portfolios (if you have any) if it’s already break-even (or even with a small loss) else you might need to wait another five years before the next general election.

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