Click on visual above to track Bursa stock price
We all know there would be bad news coming up but the latest figures are much worse than anticipated. The stock index may not be an indicator of the economy but certainy it has serious impact. Bursa Malaysia Bhd has reported that its second quarter net profit fell 56% due to the weak stock market and warned that it would be almost impossible to meet some of its targets for the full year. The figures was its worst quarterly showing since 2005. The reasons - slowing US and global economy, rising crude oil, commodities and food prices. But unlike other countries, we have another problem - domestic uncertainties.
The Malaysian Institute of Economic Research (Mier) reported that consumer sentiment sunk to an all-time low cost concerns, saying the economy was slowing down considerably. Mier has revised downwards its gross domestic product growth forecast for this year from 5.4% to 4.6% which is below the government's target of 5% to 6%.
But this is what executive director Prof Datuk Dr Mohd Ariff Abdul Kareem has to said - the Malaysian situation has been further compounded by predicament created by local politicians.
"This is affecting short term investors who would be deterred by the political situation now. Politicians need to be aware that what they do could cause a knee-jerk reaction and give investors wrong signals."
For the past one month, businessmen travelling to major cities have been asked by investors and fund managers one question - is it safe to put money in Malaysia? They hear and read stories that are disturbing to them and they questioned, rightly too, why they should not be looking elsewhere. They hear of street protests, government conspiracies, murders, sodomy, police cover-ups, statutory declarations and a possibe change of govt by Sept 16. It's all very confusing to them - to us too for that matter - and they have two options. KIV the investment or just go elsewhere. The real impact of the global slowdown has yet to be felt by most Malaysians. Yes, the ringgit has shrunk, daily expenses such as food and petrol, have shot up but generally most Malaysians have not fully understood what's coming. There has been a slight drop in the price of crude oil but unless it hovers around US$100 per barrel, which is not imminent, the situation would not improve. The govt seems to be looking for various sectors to increase revenue. The independent power producers have been slapped with windfall taxes, that could generate RM2bil a year for the govt, and now research analysts think that gaming tax may be raised, the NST reported. The question is are the politicians merely leaving this to the Finance Ministry, the bankers and experts while they indulge in their daily political accusations and counter accusations? Please, read the business section of the newspapers.