Despite the various meetings which the Prime Minister, Datuk Seri Dr. Mahathir Mohamed and the Deputy Prime Minister, Datuk Seri Anwar Ibrahim, had with foreign fund managers, and reports that everyone is now assured and happy about the economic management in the country, this is not fully reflected by the performance of the stock market.
The poor showing of the Malaysian Resources Corp (MRCB) after its announcement that it had a waiver from the Securities Commission to make a mandatory general offer of RM15.20 for shares of New Straits Times Press (NSTP) and RM5.20 for shares of TV3, after its market purchases which would otherwise have triggered the mandatory general offer obligation under the Malaysian Code on Take-Overs and Mergers 1987, is a sign of continuing investor concern at the arbitrary decisions due to political considerations – in disregard of the legitimate rights and interests of minority shareholders.
A waiver in the application of Malaysian Code on Take-Overs and Mergers is only permissible if it is in the "national interest". What is the "national interest" factor to justify the waiver in the MRCB case? Is the "national interest" really involved or is it just "UMNO interest"?
Based on the original offer in March 1997 where MRCB had to offer shareholders of NSTP RM15.20 per share and TV3 RM5.20 per share, MRCB has saved approximiately RM2.3 billion for itself or denied the minority shareholders of RM2.3 billion.
At a time when the country should be more diligent to restore investor confidence after the self-inflicted wounds in the twin currency and stock market crises, the arbitrary decision by the Securities Commission in favour of MRCB has sent very negative reactions to both foreign and local investors, and had not prevented a plunge in the prices of these three stocks concerned although the waiver secured by the MRC should have been very good news to the companies.
The Malaysian government should pay more attention to fully restore investor confidence about the fairness, transparency and integrity of the Kuala Lumpur stock exchange.
In this connection, it would do the country a lot of good if the government takes serious note of a foreign report yesterday that "One of the biggest losers in the plunge by Malaysia’s share prices from the year’s highs isn’t a stock, it’s free speech".
Sheila McNutty, correspondent for AP-Dow Jones News Service, in an article "Free Speech Suffers as Bourse Plunges" wrote:
"With police talking about locking up those guilty of ‘economic sabotage’, brokerage houses have quashed their own economists’ reports and ordered analysts not to speak to the news media, while their published research has aken on a hollow bullishness.
"Nobody wants to be blamed for the outflow of funds that has gathered momentum in recent months as fears about the economy have mounted."
She wrote of a Malaysian analyst at local brokerage house who said that if his projections are negative and turn out to be wrong, he’ll be fired, so it’s better to be positive and wrong so there won’t be any ramifications.
This has resulted in local analysts, in particular, who are more concerned about themselves than their credibility.
This unhealthy state of information about the economy came about only in the past two months.
I would urge the Deputy Prime Minister, Datuk Seri Anwar Ibrahim, to send out a clear signal to allay the fears of both local and foreign analysts that they would be penalised, or even detained under the Internal Security Act, for writing objective and critical reports about the Malaysian economy and the stock market, which is clearly an important prerequisite for the restoration of full investor confidence in Malaysia.