Stock market excitement

DURING the recent political brouhaha that finally ended with the formation of a unity government, the stock market had gone through a roller coaster ride.

After a decline led by investors’ fear of instability in the country, the FBM KLCI skyrocketed by more than 58 points on Thursday following the announcement of the new prime minister and his unity government.

While profit-taking saw the index dipping by some 15 points yesterday, there is generally a positive sentiment surrounding the market.

Investors though, ought to begin aligning themselves with the positives that are likely to come out of this new government.

What they should not be doing is continuing to punt on stocks that are deemed to be politically-linked stocks.

For example, in the run up to 15th General Election (GE15), investors chased up stocks such as Advance Synergy Bhd and Malayan United Industries Bhd and its 68.32%-owned Pan Malaysia Holdings Bhd on the belief that these companies were linked to Prime Minister Datuk Seri Anwar Ibrahim.

Meanwhile, shares of Eden Inc Bhd and Thriven Global Bhd also saw active trading for their perceived links to former Prime Minister Tan Sri Muhyiddin Yassin.

These stocks, along with others presumably linked to other PM candidates such as Tun Dr Mahathir Mohamad, were also played up in previous general elections.

It does seem to be a common feature of our stock market.

What is notable is this – back in 2020, Anwar had unequivocally said that he does not have financial interest in these listed firms and reminded investors not to make investment decisions based on rumours.

What is more important for investors to take note is the fact that the new PM is promising governance and transparency as his key principles.

Hence, even if there are any counters vaguely linked to Anwar, it is safe to assume that such companies would not be getting any freebies from the new government.

It is hoped that the new governance standards put in by the new government will go a long way in creating a level playing field in the corporate arena.

This in turn should help create better run and managed Malaysian companies that in turn will be able to compete effectively in the regional and global arenas. It is such companies that investors need to search out.