The current global financial meltdown means nothing to the guy above. Chances are that he has no inkling of the US-originated subprime mortgage crisis resulting in bank failures and closures. A contagion that has since spread across continents and escalated into a global credit crunch crisis, forcing government bail outs of financial institutions in distress.
But unlike you and I, he is not bothered about the EPF, being a lender of convenience, extending a RM5bil loan to our government, which plans to inject the money into Valuecap, thereby doubling this fund management company – jointly owned by Khazanah, PNB and KWAP – to a whopping RM10bil. Valuecap will use the RM10bil (of which RM5bil belong to contributors like you and I) to mop up the ‘undervalued’ stocks in an effort to shore up the local capital market, on the premise that ‘many’ fundamentally strong companies are trading at low prices. Of course, the stockholders (especially the margin-traders) will be more than happy to off-load their share stocks and exit the ‘under-performing’ counters. Otherwise, they could lose the shirts on their backs. It’ll be interesting to know which companies are on Valuecap’s radar.
Realistically, one wonders whether the RM10bil alone is sufficient to prop up the stock market, considering the Bursa has a market capitalization of RM984bil as at end-Oct 2007; rising to RM1.6 trillion at end-2007. Do your math and the picture is as clear as the blue, cloudless sky. The money could be put to much better use to uplift the quality of life of the needy and under-served community.
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