KLSE's Members' Dinner, Kuala Lumpur, 17 December 1994
We are all encouraged by the rapid development of the KLSE in recent years. The last couple of years have been an a period of explosive growth for the stockmarket, in tandem with an ever-expanding economy. I am glad to announce that the Malaysian economy continued its strong expansion in the third quarter of 1994, with real gross domestic product increasing at an annual rate 8.9 per cent compared with 8.3 per cent recorded in both the preceding quarter and corresponding quarter in 1993. Contrary to some pessimistic expectation, the inflation rate as measured by the Consumer Price Index moderated to 3.2 per cent in the same quarter compared with 3.5 per cent in the previous quarter.
The stockmarket, despite its choppy and erratic perfomance in the last few months, is generally expected to be strong in the long term, supported by a rock-solid economy, continued flow of foreign funds and good corporate earnings, among other things. While we are greatly encouraged by the long- term outlook, our market could do with greater involvement by local funds.
More importantly, there is a higher demand for professionalism in a rapidly changing and increasingly sophisticated market such as ours. Future development if the stockmarket will be based on the pillars of professionalism which can only be built by the concerted efforts of everyone involved in the industry. The government, regulatory authorities, stock- broking companies, listed companies, market practitioners and investors themselves should strive towards developing a healthy and orderly stockmarket.
With the scenario, those who are not proactive will not only be left behind but will also become victims of many unpleasant circumstances brought about by their own wishy-washy attitude. Not only will they miss out on the opportunities available, they stand to even lose grip of the wealth and prosperity they have amassed if they do not make the effort to retain them.
Investing in the stockmarket requires not only knowledge and commitment but also the ability to digest and analyse material information that affects market movement and price changes. But information is not always reliable and accurate; therefore it is crucial that players gather, select and act on the right information to keep up with the pace of the market. While we are encouraged by the increased activity in the market in recent years, we should also not throw caution to the wind so that we do not get caught up in the frenzy of a market fuelled by rumours and speculation alone. If the market should be left to its forces, then let the forces be good, sound ones rather than evil, rumour-driven ones.
As our market increases in size and stature, the days of gambling in the market on the back of coffee-house talk and unfounded rumours should have been long gone. It would make a mockery of our aspiration to make our stockmarket a world-class outfit if local investors continue to act on unsubstantiated rumours in their stock-picking, some of which borders on the ridiculous. The current excitement of 'playing the market' should be tempered with caution. Market aficionados might well say 'no risk, no gain' but those who make investment decisions based on sound fundamentals stand to reap the long-term benefits of prudence and patience. On the other hand, those who gamble and punt on baseless rumours are more exposed to the vagaries of speculative short-term play.
With that, I wish you a very good year ahead and a very pleasant dinner.