“KLSE CI is now only some 80 points away from its all time high of 1,314…

and surpassing this would seem to be a breeze.”

The above comment came from a local stock market specialist. But he cautions Malaysians to be more circumspect rather than exploiting the current market rally and be patting ourselves on the back.

He commented that “for the politicians and policymakers, stock market rally can be very ego boasting (when the market rallies, they would claim all the credits but when the market drops, they would pass the buck to people like George Soros).”

“Why?A stock market rally seems to be telling the whole world that everything is fine with its economy and that the government has adopted the right policies”.

“Generally speaking, this is true but the stock market rallies for all kinds of reasons and some times, the market rally can be self-deluding or what is worse, the rally generates complacency among the politicians and policymakers and painful but necessary decisions are not made or postponed until it is too late. Then, the market crashes. The Great Asian Crisis in 1997/98 is a classic example of how rallies in stock markets can camouflage structural problems until it is too late and the day of reckoning comes in full blast”.

The specialist opines that the way to manage a country or company is in a sense , very simple and commonsensical. ” When things are fine and dandy, do not become overconfident;instead get ready for the storms ahead. This way, when the storms come, which eventually they will, one will not be so wounded or so devastated that one cannot recover forever or that the recovery takes such a long time to come. The storms, like the bright sunny days, will eveuntually pass and the whole cycle repeats. Take advantage of the storms and and use them to ensure that the eventual bright sunny days do not get to be so blinding”.

The essence of this specialist criticisms was that the government under the leadership of the former prime minister implemented very short-term measures that greatly reduced or attempted to reduce the pain of the Great Asian Crisis. “In so doing, the government ignored the the adverse long-term implications of its actions and decisions. Instead of using the Great Asian Crisis to implement serious structural reforms, the government went for quickies. And we all know what quickies are like. Instead of using the crisis to prepare Malaysia for more and greater challenges, it went round blaming others for its follies.”

” In many respects, Malaysia has paid a heavy price for this and is still paying the price for ignoring long-term problems. By shielding Malaysia from the harsh and painful realities of market economy, we now have a Malaysian workforce that is hopelessly complacent and in the process, losing out to the many fast rising regional competitors.”

With the KLSE CI rallying, the specialist is deeply worried that our world-class complacency would become universe-class. “As the LKSE CI rallies, the politicians and policymakers would surely sit back and pat themselves for a job well done . Such self-prasing and complacency can be very infectious and soon Malaysians from all walks of life would fall into the same mental trap. Then, when the next crisis hits us, totally unprepared again. A few rounds of such a crisis, very quickly Malaysia would be in an economic quicksand”.

The specialist’s analysis is directed at the politicians and polymakers and Malaysians from all walks. Do not be seduced by the current market rally into thinking that we are on our way to developed status. Do not postpone the major structural reforms needed.

6 Responses to ““KLSE CI is now only some 80 points away from its all time high of 1,314…”

  1. Be more circumspect rather than exploiting the current stock market rally « Crime Free For PJ Says:

    […] February 21st, 2007 “KLSE CI is now only some 80 points away from its all time high of 1,314… […]

  2. bull Says:

    IF THE GOOD TIMES ARE BACK AS CLAIMED BY THE ABDULLAH ADMINISTRATION, HOW COME THINGS ARE SO EXPENSIVE AND STILL NO PAY INCREMENT? THE GOVERNMENT IS TALKING AS IF MONEY IS DROPPING FROM THE SKY– ONE TRILLION RINGGIT IN TRADE, KLSE CI AT ITS HIGHEST IN HISTORY, MALAYSIANS SATISFIED WITH LIFE… BULLSHIT!

  3. ronnieliutiankhiew Says:

    Posted in Malaysia-today.net…

    Jablak wrote:
    jeevfx wrote:
    Yesterday, Bloomberg reported that the level of borrowing by traders to buy into the NYSE is at a life time high similar to the level reached before the bursting of the Tech bubble back in 2001 ( dot com )
    TO CUT SHORT ……

    At the same time yesterday, gold futures went up 3% against the USD in one day. Thats like the ringgit strengthening to 3.38 overnight.

    The lifetime high by the KLCI was back in 1994 January the 3rd at 1333.

    Today the RM is at 3.4955 vs USD,
    2363.73 vs Gold.

    In 1994 RM was abut 2.624 to USD. 1036.48 vs Gold.

    So the value of RM vs Gold has fallen 56% from 94 till now. Adjust the KLCI for inflation ( vs gold ) and it should reach 3000 to achieve the life time high in (1994 RM). HUH??????

    Do not equate a number with real wealth.

    Numbers can lie, just like people.

    cheers
    22/02 18:01:51

  4. The crash came sooner than expected « Colour-blind Says:

    […] “KLSE CI is now only some 80 points away from its all time high of 1,314… […]

  5. boyboycute Says:

    The hike in the share market must be supported by good fundamental in our economy.Unfortunately,the report presented for last year growth was average.The bull is just a sweet dream.

  6. AhYap Says:

    Wahahaha, the ‘specialist’ is Tan Teng Boo from iCapital.biz, the Malaysia Warren Buffett.😀

    And surprise to see ‘boyboycute’ comment here yesterday.

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