The Cabinet tomorrow should warn off all Ministers to stop acting as investment consultants to talk up the market after the expensive lesson of RM149 billion losses suffered mostly by small investors in the stock market in the past week after the Prime Minister, Datuk Seri Abdullah Ahmad Badawi’s Chinese New Year advice to enter the market to “ride on the momentum”.
Small investors had overcome their skepticism and reluctance to enter the stock market following the Prime Minister’s exhortation at the Gerakan Chinese New Year open house in Kuala Lumpur on the first day of the Chinese New Year on February 18, 2006 to enter the stock market to “ride on the momentum” of the good economic times on the ground that the Kuala Lumpur Composite Index (KLCI) could surpass the 1,350-point level following positive indicators of the country’s economic growth — namely the trillion ringgit total trade last year, the increasing foreign and domestic investments and the rising ringgit.
In less than a week, small investors who acted on the advice of the Prime Minister and flocked into the stock exchange were badly burnt.
In two days on 27th and 28th February, the KLSE plunged 76.42 points from 1,272.87 to 1,196.45, wiping out RM69.45 billion market capitalization in two days.
It is deplorable that Abdullah, who was visiting Yemen at the time, did not immediately learn the lesson that as Prime Minister and Finance Minister, he should not double up as stock market adviser as he persisted in advising Malaysians “to have confidence and be prepared to invest in the KLSE to attract bigger foreign participation”.
Other Cabinet Ministers have also got into the act to double up as investment consultants. Continue reading “RM149 billion KLSE losses in 5 days – PM/Ministers not stock market consultants”
