It is significant that the Bank Negara Governor is making a pitch for stockbroking firms to make full use of new credit lines as much as RM54 billion available in the banking system to finance the purchase of shares, at a time when the Kuala Lumpur Stock Exchange was suffering a precipitate fall after its Composite Index (CI) reached a 20-month high of 870 points on July 5, 1999.
Yesterday, the KLSE CI plunged to 719 points at the close of trading, a drop of more than 17% in exactly one month.
At the close of trading this morning, KLSE CI plunged 27.71 points to 691.81 points - or a drop of about 20 points since the 20-month high of 870 points a month ago.
Although the official media attributes the stock market plunge to market jitters that more prominent corporate figures would be prosecuted for securities offences after Datuk Tony Tiah was charged yesterday with abetting Datuk Soh Chee Wen to defraud Omega Securities, there are market analysts who believe that the KLCI’s decline was more a fundamental correction than a reaction to the indictment.
Market analysts are also expecting more selling pressure from foreign funds ahead of the Sept. 1 headline, with foreigners getting out of stocks before the expiry of the one-year lock-in period imposed on funds following the imposition of capital controls last September.
The Prime Minister, Datuk Seri Dr. Mahathir Mohamad yesterday denied that there was a witch-hunt against corporate figures who were supporters of former Deputy Prime Minister, Datuk Seri Anwar Ibrahim.
Action would speak louder than words - and all the actions so far on arrests and prosectuions are not very confidence-enhancing. What Malaysians want to see is that there should be no selectivity in the enforcement of laws, whether selective arrests or selective prosecution.
Following the charging of Tony Tiah for corporate offences as well as the issue of warrant of arrest against Soh Chee Wen, the question uppermost in the corporate circle is the outcome of investigations into the corporate deals of the then 27-year-old "wonder boy" in the Malaysian corporate world, Ling Hee Leong, the son of MCA President Datuk Dr. Ling Liong Sik, who could in three months acquire RM1.2 billion worth of corporate stakes - especially as an official report had been lodged with the Anti-Corruption Agency specifically on this matter two years ago.