A mass rally planned for tonight by the opposition alliance Pakatan Rakyat is also keeping investors on the sidelines, dealers said.
The planned gathering is to protest the arrest of three civilians under the draconian Internal Security Act (ISA) after market-close last Friday.
“There are many factors keeping share prices down, including weak overseas sentiment because of the plunge in Lehman Brothers shares in the US, but for the local market, it is mainly the ISA,” said Malaysian Investors Association president Dr PHS Lim when contacted.“How can you arrest a journalist who was just reporting the situation? How can investors expect to get any transparent and accurate information?” he asked.
“This is the core of it - not just whether Pakatan or Barisan takes over the government - but whether we can have a strong regime that can provide a stable, fair and transparent environment for business people and investors.”
Sin Chew Daily journalist Tan Hoon Cheng, opposition politician Teresa Kok and MalaysiaToday editor Raja Petra Kamarudin were detained under the ISA, which allows for detention without trial.However, the arrests triggered unexpectedly fierce domestic and worldwide condemnation. The furore has since pressured Abdullah into releasing Tan, who had exposed racist comments made last month by Umno chieftain Ahmad Ismail against the Chinese community.
Kok, the DAP MP for Seputeh, and blogger Raja Petra remain in police custody.
Disagreement Over View
Second Finance Minister Nor Mohamed Yakcop told reporters over the weekend that the action was necessary to ensure the long-term stability of the country and, at the same time, shore up investor confidence.
"There might surface some issues related to investments and the inflow of funds over the short term. Investors will wait and see over the next day or two,” he was quoted as saying by Bernama.“But over the long term, there should be no problems. Investors from within and outside the country would like to see political and social stability to enable them to conduct their business in a stable environment."
Nevertheless, industry experts disagreed with the minister.
Said Lim: “I disagree with him completely. We won’t see investors coming back perhaps until after a new general election. Whoever takes over must show convincing authority in parliament.
“This is the only way to have stability because we don’t have transparency. We are not like Japan yet, where the bureaucracy is mostly neutral and separate from the politicians.”
Lim expects the benchmark Composite Index to stay weak in the short term, possibly breaching the psychological 1,000-point level soon. However, he expects strong support at 900 points, but warns against technical rebounds.
“Shares prices are now very cheap but because of the uncertainty, nobody dares to buy and get stuck. At this point, I don’t see any prospects for a sustainable technical rebound,” he said.
The Kuala Lumpur Composite index plummeted to 1,028.17 points, down by 15.86 points at the midday break.
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