Are things getting overly bearish?

Yes I believe so. Fundamentally we are now trading near crisis levels. Should it be a screaming buy now? Yes, politically we are now in unchartered territory but opportunities like this don't come very often. Below is an article from the Singapore Business Times.


Business Times - 08 Jul 2008
Uncertain times in Malaysia

IF Malaysia's stock exchange were regarded a barometer of its economy, the country is headed for a mighty storm. Since January, the benchmark Composite Index of the Kuala Lumpur stock exchange has dropped around 22 per cent, one of the worst performances in the Asia-Pacific region. Much of the steepest falls came after March 8, a watershed date in the country's history when the ruling National Front coalition registered its worst-ever electoral showing.

Sadly, things appear to have taken a turn for the worse since then. Prime Minister Abdullah Ahmad Badawi has been attacked relentlessly by his predecessor Mahathir Mohamad who blames him for the Front's poor showing. In turn, Dr Mahathir himself is being attacked by a High Court judge for attempting to influence trial outcomes when he was in power.
And as if all this were not enough, a 23-year-old male aide claims that he was forcibly sodomised by the 61-year-old former deputy premier and de facto opposition leader Anwar Ibrahim, echoing an allegation made against Mr Anwar a decade ago for which he was tried and eventually absolved.

Adding to the tension are allegations that Najib Razak, the current Deputy Prime Minister, was involved with a Mongolian model whose murder is the subject of an on-going trial. Worse, the man who released his statutory declaration with the allegations, retracted them the next day and has since vanished with his family, raising more questions about this case.
Meanwhile, Mr Anwar has lodged a police report alleging corruption against the country's top police officer and its Attorney-General. The reports are being investigated by the country's Anti-Corruption Agency.

Then there are questions about the integrity of High Court appointments following the inquiry and report on the so-called Lingam tapes. Clearly then, Malaysia is in a political mess. Yet, despite the gloom in the stock market, the broader economy is doing relatively well: it remains a net oil exporter and is a leading producer of commodities from palm oil and rubber to gold and pepper, all of which are fetching high global prices. Exports remain buoyant, the country has a strong net reserve position and domestic demand remains surprisingly resilient.
But, make no mistake, continued political uncertainty will take an economic toll; investors will stay on the sidelines till the dust settles.

Mr Anwar claims that he has enough support within Umno, the dominant partner in the ruling coalition, to engineer a collapse of the government.
But this only adds to the uncertainty. Economic management is getting little attention. Left to drift, the situation will eventually erode Malaysia's economic, as well as social, foundations - a dangerous development.


Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved