Zahid Hit with 45 Charges (UPDATED)

Today, our former Deputy Prime Minister, Ahmad Zahid Hamidi was charged in courts for committing 45 offenses, listed below:


For more, go here.

Of interest to us in the stock market are the following charges for receiving gratification:



My take is that the above charges could lead to legal liabilities for Datasonic Group Bhd ("DSONIC") if it can be proven that it offered money to induce the award of the contract by the Minister. In the case of MYEG, it may still be held liable if it were a party to an illegal act. If a company is found guilty of committing an offense, the company may be fined and/or the contract awarded may be terminated. Thus, I can see that implication of these gratification charges may have great impact on DSONIC than on MYEG. Nevertheless, since both companies are dependent on government's contracts in the long run, any blemish on its business conduct will impact its chance of success to secure new contracts or renewal of existing contracts.

*****

Chartwise, DSONIC has broken below the line connecting its recent lows, AB. 

Chart 1: DSONIC's weekly chart as at 19, Oct 2018_12.30 (Source: Malaysiastock.biz)

MYEG is now resting on its intermediate uptrend line at RM1.13. Its next support levels are at RM1.10, RM1.00 & RM0.95.


Chart 2: MYEG's weekly chart as at 19, Oct 2018_12.30 (Source: Malaysiastock.biz)

DSONIC has denied that it had issued any payment to the former DPM (here) while MYEG has requested a suspension of the trading of the shares on the exchange.

In view of the poor market sentiment, the negative news on DSONIC and MYEG will have longer negative implication. If you want to get into these stocks, you have to accept that the potential reward comes with high risk.

(Note: I have attempted to re-present this post with updated information as well as to tidy up the presentation. Alas, the presentation is still less than satisfactory.)