On the Beat | By Wong Chun Wai

Bull brings back confidence

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

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 

It remains to be seen whether  Barisan
would be rewarded for its  efforts to
turn around the economy  with minimum

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

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

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

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.