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Only A Bursa Malaysia With  High Levels Of Disclosure, Transparency And Accountability Giving Honest Returns Based On Value Creation And Not Rent-Seeking Can Boost Investor Confidence. 

Media Statement
by Lim Guan Eng

(Petaling Jaya, Saturday): DAP supports the warning issued today by newly-appointed Securities Commission chief Datuk Zarinah Anwar to market manipulators that the SC will not allow their illegal activities, abuses of power and insider trading to tarnish the stock market’s integrity. Such warnings must be followed up by action so that such market manipulation that has attracted criticisms of Bursa Malaysia being no different from a casino can be changed to a world-class capital market market.

On May 11 2006, the SC declared Mesdaq-listed Iris Corp Bhd a designated stock, which requires an investor wishing to purchase the company’s shares to pay cash upfront. (Iris’ share price rose 1,500% in eight months to RM1.36 on May 11 from 8.5 sen on Sept 12 last year. It gained RM1.275 during the period.) However to ensure fair and orderly trading, such action must be enforced equally.


Questions had been asked why Fountain View Development Bhd’s shares were not similarly designated before it collapsed on 28 April 2005 and ending with the share price closing at RM0.40 on 12 May 2005. Fountain View shares were listed on the KLSE (now Bursa Malaysia) on 18 November 2003 at a listing price of RM1.00. Barely 2 months later on 6 January 2004, the price of Fountain View shares was recorded at RM6.20 and thereon the said shares were traded on thin volume between RM4.90 and RM6.00 until 27 April 2005.


If the shares of Kluang Rubber could be designated on April 22 2005, why did the Bursa Malaysia or KLSE not take similar action against Fountain View which could have protected minority shareholders and investors’ interests.


To ensure that Bursa Malaysia remain an attractive capital market that can spur foreign capital investment, Bursa Malaysia must prove that is a well functioning market with  high levels of disclosure, transparency and accountability. Only markets which are seen as giving honest returns based on value creation and not rent-seeking can boost investor confidence. 


The removal of 10 Malaysian firms from the FTSE Global Equity Index series on 20 March 2006 indicates lack of confidence by foreign investors in the BN government’s handling of the economy and failure to promote transparency, accountability and professional management of Government-Linked Corporations (GLCs) This was followed by the Morgan Stanley Composite Index(MSCI) provider that on May 11 2006,   14 Malaysian stocks would be deleted from its MSCI Standard Index Series. No new Malaysian stocks were added to replace the 14 Malaysian stocks deleted. 


Instead of promoting transparency, we promote corruption. Instead of merit, we have quotas. Instead of technical “know-how” we have political “know-who”. Instead of good governance, we have black magic. Lack of competitiveness, inefficiency and poor productivity is the price we pay for the government’s failure in executing its promises to reform our economy.


Bursa Malaysia’s stocks were the worst performer last year in Asia with negative return of 0.8%. Unless immediate measures are taken to stop market manipulators and insider trading as well as promote transparency, merit, technical know-how, accountability and good governance, DAP fears that Bursa Malaysia will continue to perform badly as they did last year.


* Lim Guan Eng,  DAP Secretary General

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