NOVEMBER 20 — Datuk Seri Najib Razak made a statement yesterday claiming that the change in government during GE14 has caused the stock market to fall and the share prices of GLCs to decline, hurting those that receive dividends from institutions such as EPF/KWAP/Tabung Haji/LTAT/PNB and other unit trust owners.

Although a change in government has caused some uncertainty in the stock market, the main reasons for the decline and outflow of funds are global factors such as trade war tensions between China and US and rising interest rates in the US. These factors have hurt the stock markets of all Asia-Pacific countries, not only Malaysia.

Based on the data compiled from major indexes below, the KLCI index has declined -7.35 per cent since GE14 on the 9th of May 2018. This loss is similar to the average loss of regional stock markets of -7.14 per cent.

In fact, Malaysia outperformed other Asia-Pacific markets such as Singapore, China/HK, Korea and Taiwan which declined in values ranging from -8.17 per cent to -14.01 per cent.

Malaysia also outperformed the MSCI Asia-Pacific Index which was down -11.93 per cent. This is an index used to represent Asia-Pacific markets and is recognised as a benchmark by fund managers and investors globally.

Did the markets that declined more than Malaysia such as Singapore, China/HK and South Korea see elections and a change in government? They did not, yet their stock markets performed poorly due to the abovementioned global factors. Malaysia, despite being a victim of these global factors, still managed to outperform several of its regional peers.

Index At 8th/9th May 2018 At 19th Nov 2018 Change ( per cent)

Indonesia (JCI) 5907.94 6005.30 +1.65 per cent

Philippines (PCOMP) 7555.27 7270.26 -3.77 per cent

Singapore (STI) 3548.54 3065.07 -13.62 per cent

Thailand (SET) 1756.9 1636.48 -6.85 per cent

China/Hong Kong (HSI) 30536.14 26372.00 -13.64 per cent

South Korea (KOSPI) 2443.98 2100.56 -14.01 per cent

India (SENSEX) 35319.35 35774.88 +1.29 per cent

Taiwan (TWSE) 10703.35 9828.69 -8.17 per cent

Average Loss   -7.14 per cent

MSCI Asia-Pacific  172.98 152.34 -11.93 per cent

Malaysia (KLCI) 1846.51 1710.71 -7.35 per cent

Instead, since GE14, the Pakatan Harapan has managed to stabilise the stock market and calm investors by practising transparency and communicating with stakeholders such as equity investors, rating agencies, bondholders etc. This has resulted in the stock market rebounding from a low of 1663.86 points to its current 1710.71 points. The government’s strong commitment to balancing growth measures and cutting the fiscal deficit over the longer term has also resulted in the rating agencies maintaining their ratings and outlook for the country.

As long as the Pakatan Harapan can continue practising good governance, implementing growth policies, cutting deficits, bringing in investment from businesses globally and raising household incomes, wealth creation for the country will happen over the long term and we should see KLCI go higher.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.