KUCHING: Association of Stockbroking Companies of Malaysia (ASCM) urges the Malaysian Government to suspend the trading of Bursa Malaysia Securities immediately in line with the recent Movement Control Order declared by Prime Minister Tan Sri Muhyiddin Yassin.
Chairman of Association of Stockbroking Companies of Malaysia, Datuk Dr Azman Manaf said: “Bursa Malaysia should be suspended for the time being as a defensive measure to protect the stockmarket from suffering severe damage that could take almost a decade to heal.”
He said the closing of FBM KLCI at 1,239.01 points on Wednesday showed that it had retracted by more than 28 per cent from end of December 2019, which stood at 1,588.76 points, adding that market participants have already endured two major events recently, namely the change of government and the Covid-19 pandemic. Stock exchanges around the world have plummeted, the worst being Wall Street.
“The Malaysian stockmarket has experienced a 23 per cent drop in market capitalisation from RM 1.04 trillion on 31 Dec 2019 to to RM804.63 billion on March 18, 2020,” he noted.
He said China suspended its Shanghai and Shenzhen Stock Exchanges amid the financial turmoil and the Philippines also suspended its stock exchange on Tuesday, becoming the first country to suspend its stock market trade in response to the widening coronavirus pandemic.
The suspension order in Philippines was called after stock markets and oil prices went into freefall after its central banks’ fresh stimulus measures failed to dampen investors’ fears.
“With the suspension of Bursa Malaysia, all participants of the stock market, i.e investors, market players, pension funds, brokers, investment bankers, foreign investors and fund managers, will be able to utilise the time and relaxation to re-engineer their strategic and trading portfolios, as well as to avoid liquidation of accounts and force selling of leveraged accounts,” he said.
He warns that the negative impact will be catastrophic and possibly even drive the index below the 1,000 mark if there is no evasive action put in place immediately.
“Such a catastrophe will definitely affect the national economy in the worst possible way.
“Banks will carry a huge amount of non-performing loans and public listed companies will see tremendous erosion of market capitalisation, while brokers will carry big contra losses and thousands of retail investors will experience bankcruptcy,” he cautioned.
With its inception back in 1986, ASCM was first registered as the Malaysia Stockbrokers Association.
Today the association has a membership of 27 brokers nationwide.
The function of the association is to promote the interests of stockbroking companies by providing a unanimous “brokers” voice to relevant authorities and the public.
It also actively participates in all issues directly relating to the development and progress of the stockbroking industry and helps realise the Government’s vision of transforming Malaysia into a regional financial centre.