(Petaling Jaya, Monday): The Foreign Investment Committee (FIC) reinstatement of the waiver to United Engineers Malaysia (UEM) has shattered the painful recuperation for the restoration of market confidence, as seen by the unprecedented limit down for UEM after the opening of trading at the Kuala Lumpur Stock Exchange this morning, plunging by 97 sen from RM3.24 per share to RM2.27 per share.
Renong also plunged from RM1.80 to RM1.30 and was heading for the limit-down of 30 per cent (i.e. 54 sen) within seconds, when in panic, both UEM and Renong counters were suspended from trading.
The one-minute limit-down of UEM and virtually the case of Renong, and their suspension one minute after trading, raises many questions which sent the market into another paroxysm of outrage as manifested by the KLSE CI falling by 3.43 percentage points or 16.86 points to an all-time low 474.74 at the close of morning trading.
The first question is if the UEM and Renong, which were suspended from trading on Nov. 24, are to be suspended from trading within one minute of requotation, why should UEM and Renong be traded today?
Secondly, who made the decision to suspend the trading of UEM and Renong within one minute of opening of trading? Is it possible for the KLSE to approve the suspension of trading of UEM and Renong within one minute of trading? The process must have involved several steps, including the application by UEM and Renong to KLSE for the suspension of trading, the KLSE studying the application and making a decision, and communication of the decision of the KLSE to the market on the suspension of trading. Could all this be done in a matter of one minute? Such "efficiency" of the KLSE, far from inspiring confidence in the market, has the exact reverse effect as it raises the question as to who, actually, is running the KLSE.
Thirdly, who has again bungled in believing that the expected outrage at the FIC reinstatement of the waiver for UEM in the RM2.34 billion acquisition 32.6 per cent or 722.9 million Renong shares could be neutralised by the announcement that Renong executive chairman Tan Sri Halim Saad has agreed to a "put option" requiring him to purchase up to the entire amount of UEM’s newly acquired Renong stock at the same price UEM paid for it last year.
The fourth and most important question of all is why FIC reinstated the waiver granted to UEM and parties acting in concert with it from having to make a general offer for Renong Bhd shares they do not already own.
The long-term repercussions of the FIC reinstatement of the waiver to UEM will be even greater and more disastrous than the initial announcement of UEM acquisition of 32.6 per cent stake in Renong on Nov. 17, which transformed the definition of blue-chips as cash-rich companies closely linked to the government were regarded as high risks as being liable to be raided to bail-out other troubled companies in the same stable.
The FIC reinstatement of the waiver has reinforced such fears and created new anxieties. It would appear that the FIC reinstatement of the waiver is the final triumph of Tun Daim Zainuddin on this issue, who in early December publicly expressed his disagreement with the Deputy Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim on his announcement in Parliament on the revocation of the waiver and contended that UEM's stake in Renong was below the 33 per cent trigger for mandatory general offer, and that approval was given to UEM on its own and not in concert with other interested parties.
Anwar said yesterday that the Securities Commission and the Kuala Lumpur Stock Exchange had submitted a report to the Economic Planning Unit (EPU) and the FIC, which in turn made this recommendation.
It would appear that the final authority on corporate matters is not the Securities Commission or the Finance Ministry but the EPU and the FIC!
This has also given the impression that even before the establishment of the National Economic Action Council(NEAC), the executive director of the NEAC is already able to flex his muscles as the Economic Czar of the government!
The FIC and the various regulatory agencies like theSecurities Commission and KLSE must explain the rationale for the reinstatement of the waiver for UEM in utter disregard of minority shareholders in UEM, which is not advanced in any way by the "put option" given to UEM by Halim Saad.