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Ten years after 1997 Crisis, another Window of Opportunity?



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Jun 19 2008
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After the recent 12th general election on 8th Mar 2008 that saw the once giant National Front (Barisan Nasional) tumbled without knowing what hit them, I’ve wrote that the political landscape has changed and one should really take this into consideration before commit any more money into the stock market. Of course I also wrote that I would definitely consider Sime Darby for RM5.00 a share, Maybank for RM3.00 a share, Berjaya Toto for RM2.00 a share, Public Bank for RM5.00 a share and DIGI.com for RM5.00 a share – if only these stocks fall to such mouth-watering level. But it never did, at least not yet.

And many readers were smiling and giggling at my target prices (above). Yeah, I just plucked it from the sky *grin* but was the number realistic? Hmm, if my memory serves me right Maybank’s share price plunged lower than that during 1997 Asis Crisis. Even then, the largest lender which was founded by Malaysian business tycoon Khoo Teck Puat with a few partners failed to attract buyers. What you saw was consistent selling and the more former premier Mahathir whacked currency speculators, the more punches were thrown at the stock. So was there any difference back then and now?

Slightly more than 10-years ago, nobody believes the 1997 Asia Crisis could spread to such a magnitude. Majority of stock investors or traders were badly burnt simply because they did not or refused to believe it was the end of the Super Bull Run which started in 1993. We can debate until the cows come home if the economy impact of 1997 Asia Crisis could match the current political crisis in Malaysia. You might argue that the 1997 crisis was a global one while current 2008 political crisis is a domestic issue but you have to add in the spices of global oil crisis, global food shortage, U.S. economic crisis and so on. Mix all these ingredients together and you’re looking at a possible new problem never seen in the history of the nation before, the same way we didn’t expect the 1993 Super Bull Run and 1997 Economic Crisis to happen (to such magnitude) back then.

window of opportunityIf today’s 16-points drop in the KLSE is any indicator to goes by, chances are high that such plunge is only the tip of the iceberg if the second wave of politic tsunami is coming soon. To borrow a statement from Second Finance Minister Nor Yakcop who said SAPP’s latest move is irrelevant because it was just a small party, you can imagine how KLSE will performs should bigger parties such as PBS (Parti Bersatu Sabah) and UPKO (United Pasokmomogun Kadazandusun Murut Organisation) decide to dance to SAPP’s tune. Together, SAPP, PBS and UPKO could pull 9 Parliamentary seats out of ruling government BN. However SAPP has no intention of hitting PM Abdullah Badawi under the belt. A vote of no confidence is enough to send psychological blow to the PM who is perceived to be the weakest PM the country ever had.

It’s hard to blame Sabahan after years of requests for autonomy such as 20% oil royalties and problems of illegal immigrants fall on deaf ears. From one of the richest state Sabah now is the poorest state despite huge resources such as timbers and black gold which were systematically squandered and plundered. It appeared the federal government does not have any intention to solve the estimated 2 million of illegal immigrants from Philippines and Indonesia with more than half of them hold Malaysian identity cards thus enjoying all the rights of citizenship including voting rights.

Neverthless one cannot discount the possibility that SAPP’s latest stand was just a bait to flush out potential traitors within the ruling government. The latest BN supreme council meeting (reported by MalaysiaKini) decided not to take any action against SAPP, for now. Either the whole episode was another drama or the government cannot afford the domino effect of other Sabahan parties take the same route. Whatever it is, the stock market will continue to be gloomy. This could be the window of opportunity to buy cheap stocks since 1997 crisis – provided you’ve the cash. Meanwhile just enjoy the show with popcorns and coke.

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Comments

Hi,

“a bait to flush out potential traitors within the ruling government”. Good one…never thought of that.

Can spend me the popcorn and cokes ar?

Choong

sure choong … it would be extremely boring without the snacks … cheers …

got any stock pick if klci tanks? What is I’d opinion?

hello kris … you’ll know which stocks to pick when klci tanks … first priority is the blue chips of course …

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