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Thursday, October 12, 2017

Market Outlook as at October 12, 2017


Our market is at a critical juncture. If it breaks below 1750, it could well be the end of the rally that began in January this year. Lower support levels at 1725 & 1700 are mere stops for a market in search of a bottom. What could possibly cause the rally in our market to end? Politics!


Chart 1: FBMKLCI's daily chart as at Oct 12, 2017_12.30 (Source: malaysiastock.biz)


Chart 2: FBMKLCI's weekly chart as at Oct 12, 2017_12.30 (Source: malaysiastock.biz)

Our rally has always been billed as an election rally. While the election has yet to be called, the ugliness of our politics has shaken the confidence of investors. In the past few days we saw incredulous reports of a huge corruption case in Sabah involving an opponent of the ruling party. How could RM1.5 billion of budget allocation be stolen? Of course, we know bigger sums went missing in a certain company but that's a company controlled by a few crooks. If corruption has reached a point where RM1.5 billion could be carted away from our government ministries, the end is near for Malaysia.

Next, we read about a personal attack on the Sultan of Johor who had earlier spoken out against certain extreme religious practices. What's surprising was the disquiet and inaction on the part of the authority to investigate the case. This has led to much unhappiness in Johor and possibly to the current round of wild talk about secession from the Federation.

Now is a good time to put a swift end to no-holds-barred politicking which we have seen in the past few years. The responsibility rests on our Prime Minister to do the needful and not merely keeping an elegant silence. He must decide what is more important; his political career or the fate of the nation. If he choose to put his survival ahead of the nation, he will not be judged kindly by future generations.

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