In the past few months ago, my friend had introduced me a unit trust agent during dinner at a “Mamak” stall. He said that is unreasonable that KLCI still struggling within 800 – 900 points. From his point of view, KLCI should now reach more than 1400 points! He supports his statement by a reason that GDP of Malaysia is growing from year to year since 1996. Do you agree with his point? And how far is his statement correct?
For me, yup! There may be some points from his reason. But I don’t know for certain what is the reasonable level for KLCI. Anyway, we are not “blind”. The figures had said everything to us. In the past decade, of course there are some investors gain profits from there. But there are more people had burnt their money. From a statistics, on average, any $100 invested in a blue chip stock within this period will now left $77.61.
In this past 10 years’ period, there are many reasons apart from 1997/98 Asia Economic Crisis that caused KLCI not performed well. Nowadays, most of the world’s Main Stock Markets had shown us their potential of growing except KLCI seems still haven’t recovered from 1997/98 Asia Economic Crisis.
As you can see from the above table, KLCI has dropped about 22.39% since year 1996. On the other hand, it’s Second Board Index has even dropped about 85.62% since year 1996(i.e. from 576.31 to 82.85)!
A decade ago – i.e. 1996, it’s the most glorious moment for KLSE; they were claimed to be the stock market with the highest market value in the Southeast Asia and recognized by many global investment institutions as the new market with the greatest potential of growing in the future. But all of these had now left as a “romantic” memory.
You may ask why it’s hard for KLSE to get back to what had achieved before 1997 Asia Economic Crisis. The main reason is that there are many positive changes, steps and policies have been made by the regional countries for facing the globalization. But Malaysia seems still stays at the same place and persists on her old policies (e.g. At least 30% of shares must be allocated to their natives for a foreign company to be listed in KLSE and start operation in Malaysia).
As we all know, China and India have already opened their market; they are now growing in a fast pace and play an important role in the world’s economics. On the other hand, Thailand and Indonesia had withdrawn their narrow-minded policies for bringing more foreign capitals into their countries. Singapore and Philippines continue in improving their policies for facing globalization. E.g. Singapore has a great merit-based policy for improving their capability of competing in the global market. Even Vietnam has now become one of the new potential markets in the Southeast Asia. Nowadays, KLSE has been the “Last Station” to be considered by the global investors in this regional Market. Hence, it is really a hard work for KLSE to get back what it had achieved in year 1993-1996.
