Malaysiakini Letter

Stock market fastest way to stimulate economy

Koon Yew Yin  |  Published:  |  Modified:

LETTER | There seems to be a relentless stream of critical commentary on Pakatan Harapan since it assumed the reins of government nearly a year ago. The overarching narrative is one that sees a steep slide in public confidence in Harapan's governance.

Beside plugging all the loopholes, jailing all the corrupted politicians and corrupted government officials, I think the fastest way to stimulate our economy is by encouraging people to invest in the stock market so that entrepreneurs can raise more funds to expand their business operations. As a result, they can make more profit to pay more taxes which the government requires to function efficiently. The government can use the money to build better infrastructures and other facilities to stimulate our economy.

Currently, fewer people are investing in the stock market than previously. Bursa Malaysia used to have a total of 4.4 million CDS accounts; now it only has 2.5 million. Bursa registered an average of 100,000 accounts openings each year. Yet the total figures of CDS account still stands at 2.5 million since 2014.

Twenty-five years ago, we were one of the largest trading stock markets in the world. During our heyday, our brokers were flushed with money, our economy was prosperous and growing. Our capital market back then was awash with hot money and it fuelled the speculations of the common people's dreams. Those golden days are no more.

Today, people don't dream about the stock market. Our entrepreneurs no longer aspire to raise funds from the stock market, nor does the man-in-the-street wish to participate in the opportunity offered by our best and brightest entrepreneurs. The stock market has become a boring place.

It is not that our entrepreneurs have lost their shine. They just shun our stock market. Entrepreneurs do not see the stock market as the channel to raise funds. They can issue bonds, get bank financing or dispose of assets. Investors do not see the stock market as a path to build their wealth. They invest in property, bonds and fixed deposits. The last thing that comes to anyone's mind is the stock market.

How hard things have fallen. I see great companies trading at a depressive value. And there is no light at the end of the tunnel. I see people giving up on the stock market; there isn't any gold mine to dream of. After many years, the journey has been lonely and only some of us survived, scraping by each day. Not exactly a great sight.

About 25 years ago, when I co-founded IJM Corporation Bhd, it's market capitalisation was below RM1 billion but very quickly it expanded to have a market capitalisation exceeding RM10 billion.

I believe the fastest way to stimulate our economy is for the Harapan government to encourage entrepreneurs and investors to list their companies on the stock exchange to raise more funds to expand their businesses.

I wish to suggest to the Harapan government to instruct the officers from Bursa Malaysia and the Securities Commission to wake up and start working. Listen to your direct customers. Year after year, the investment community is not growing but shrinking.

They must be mindful of the ruinous effect of the unit trusts. The unit trust industry as a whole collects fees no matter what happens. It pays for the parties of managers, promoters and analysts. The fees amount to billions given that the size of the industry is in the hundreds of billions. Promote low-cost ETFs as an alternative instead. 

Encouraging these unit trusts isn't helping the market any more as we are oversaturated with unit trusts. There are 1,800 unit trusts and there are only 1,100 listed companies. This does not make sense. The industry is addicted to unit trusts rather than other alternatives.

The very basic thought should be to get people back into stock investing. Start launching initiatives and create programmes that work. Get out of the buildings, go to the universities and colleges. Engage real people and get feedback that can be built upon. It's been a long time since we saw anyone championing stock investment at the universities and colleges where the young and bright gather. 

Instead of waiting at the office worrying and analysing the numbers, hear what people want to say. Find influencers and engage them instead of penalising them. Showcase the best listed companies instead of letting them lie low. Have an aggressive mindset. It's been ages since we had a good time cheering and listening to the captains of industry.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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