As expected, the opposition parties are telling
Malaysians that the recovery is not
real. The strong market sentiment, they
argue, is due to support from
government agencies.
On the other hand, the Government has come out with a list of statistics to back its arguments.
Some market analysts see the KLSE
performance as a pre-election rally and not due to returning economic confidence and low interest rates.
Foreign funds, they point out, are not
strong and that it would be difficult
for the local pundits to hold on to that
huge volume being traded daily.
Financial weekly The Edge notes that
there was not much of a broad-based
pre-election rally prior to the past three elections of 1986, 1990 and 1995.
If a strong government is elected, as in the past, it is almost likely that the stock market would be strong, even if only for a short time.
But if a two-thirds majority is
denied worse still, a hung
government we can be certain that the stock market would plunge because of
political uncertainty. Foreign investors would not know who to deal with in such circumstances.
The general election this time should
remove the element of uncertainty.
That aside, the current bullish trend
does have an impact on voting patterns.
Realistically, not every voter dabbles
in shares but in urban areas, a feel-good sentiment is pertinent before the
polls.
Middle-class voters, particularly among
the Chinese electorate, consider the economic recovery as a key factor when they casting their ballots.
And the KLSE performance has always been
regarded as one indicator of any economic recovery.
While speculation is sometimes perceived
as a form of gambling, it cannot be
denied that ordinary Malaysians have made money from the stock market and that it has a trickle-down effect.
Restaurants are packed again, there are
more property sales, and a bigger demand
for cars. Consumer spending has risen because
more money is going around.
Forget about what the politicians and
the economists tell you, just take a
cursory look at the classified advertisements
many companies are hiring again.
Employers want to make sure they are
ready to cash in through increased
production when consumer spending is high, particularly in the run-up to the
new millennium and approaching Hari Raya.
If the feel-good factor continues over
the next few months, it will be to the
advantage of Barisan Nasional. During the 1995 general election, the coalition won a landslide
victory because of the strong
economy.
It remains to be seen whether Barisan
would be rewarded for its efforts to
turn around the economy with minimum
pain.
Foreign fund managers have already given a more optimistic growth rate than the Government's projection.
There are those who argue that other
countries, including those which
accepted IMF help, have done
better.
They forget that in the case of Malaysia,
the stakes are still in Malaysian hands.
Our banks did not collapse and there was
no massive loss of jobs, unlike Thailand
and South Korea.
And the ringgit did not turn into
worthless paper overnight.
We have performed better than expected,
despite the gloom and doom scenario
which the foreign media painted for
Malaysia.
For now, our banks should not be
over-cautious; loans for productive
projects must be given out to spur
further growth.
At stock-broking firms these days,
investors admit that they should have
followed the advice of Prime Minister
Datuk Seri Dr Mahathir Mohamad to go in when the KLSE index was down to 262 points last year and some stocks were worth less than five sen. Today, they have climbed back to their original levels.
A housewife in Nilai, Negri Sembilan, heeded Dr Mahathir words. She is now the owner of a single storey house
which she rents out to several
air-stewardesses.
She paid cash for the house after
selling the shares which she had
bought low.
It's a true story one of many that tell of how Dr Mahathir is often proven
right much later.
