Special Alert: Political Risk Move Up Another Notch

Concerns about Malaysia’s political instability continue to move up after news broke out in the press last weekend that Anwar Ibrahim (the de facto leader of Pakatan Rakyat) has been accused of sodomy (again). In addition, Mr. Anwar also received death threats over the weekend which resulted him to seek refuge in the Turkish Embassy. YouInvest team believes that political risk in the country has heightened sending negative sentiment sent to the stock market. In the near term, market sentiment will remain weak as news reports on political mud-slinging and power jostling between local politicians will keep stock market investors on the sideline.

Readers do not be fooled by the the closing momentum of the stock market today (30th June 2008). This is because there are some funds out there are artificially supporting key index stocks from falling drastically. Managers of these funds are supporting share price in order not to report bad (loss) numbers when they face their unitholders and fund contributors. This kind of artifical share price management support are commonly refer to as "WINDOW DRESSING" which are commonly found during the last day of the month, quarter, half-yearly or yearly (last trading day of the year).

YouInvest will continue to keep our ears on the ground for our readers and our unit trust clients for further updates of the Malaysian stock market and will advise accordingly. For now we are staying cautious and defensive on 2 counts [1] Political risk and [2] Inflation risk.

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Malaysia Stock Market Review for Week Ending 27-June-2008

Stocks in Malaysia continue to slip even after the poor performance from last week. The KLCI, benchmark index erased –16.13pts to 1,190.54 falling below the critical level of 1,200. TM International (which holds Celcom and telecoms operations in Indonesia, Sri Lanka and India) was the biggest losser this week after it announced possible merger of Spice Telecom (its India unit) with Idea Cellular. This deal could see TM International paying RM5.9bn. Investors reacted negatively to this deal triggering them to sell their shares to avoid any potential earnings dilution in the future. The YouInvest team also agrees that TM International is overpaying and the economics of the deal does not stack up. Among other stocks that were sold down were IOI Corp and PLUS. Negative external factors also contributed to the overall bad performance of global stock markets. Amongst these negative factors are inflationary pressures, sub-prime crisis in the US and higher oil prices (touched US$140/barrel when writing).

Recommendations: We remain defensive and cautious at this juncture due to economic pressures (inflation) surrounding us.

YouInvest will be starting the [Unit Trust Investment] segment in July, remember to follow as we explore the wonders of unit trust investment and how it can help you overcome lowering value of RM (or inflation pressure) and potentially make money in the long term.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful.

http://youinvest-malaysia.blogspot.com/

Malaysia Stock market Review for Week Ending 20-June-2008

This week the stock market still performed poorly with no improvement in sight. The KLCI, benchmark index continue to drop by -31.39pts to 1,206.67. Political uncertainties continue to put pressure provoking foreigners to sell our market. Biggest market moving news this week was delivered by SAPP's party president Datuk Yong Teck Lee who expressed a motion of no confidence against PM Datuk Seri Abdullah Ahmad Badawi. To investors, it is always better to avoid uncertainties and stay out of the market (hence, the selling of stocks) than waiting for bad news to come out.

Of course, all cannot be blamed on the uncertainties of Malaysia's political scene. Global inflationary pressure is also part to be blame for the poor performance of global indicies. What the world is facing right now is "cost-push inflation". These kind of inflation are mainly caused by increasing basic material prices. Look at mineral, metal, agricultural commodities oil and fuel prices right now, they are now at "never-seen-before" prices.

Relatively speaking, if you and I didn't made as much money to cushion these price increases, don't you think you are a few Ringgit poorer. The most prevalent cost-push inflation to hit average Malaysian is the recent petrol hike from RM1.92 to RM2.70. We at YouInvest sure felt poorer. Ouch.....

YouInvest will be starting the [Unit Trust Investment] segment in July, remember to follow as we explore the wonders of unit trust investment and how it can help you overcome lowering value of RM (or inflation pressure) and potentially make money in the long term.

YouInvest - Malaysian Investment Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful
http://youinvest-malaysia.blogspot.com/