Difference between the Malaysian and Indonesian Stock Markets

One picture is worth a thousand words. What better way to describe the difference between our Malaysian and the Indonesian Stock Market with the following charts. Our Market is bogged down by too many regulations or should we say too overly regulated by the authorities. The following Charts for MLPL-w and MLPL which are listed in the Indonesian Stock Exchange had one hell of a ride for the past few days.

MLPL has been consolidating for the past month and finally break out from the 215Rp level on 14/01/2013 and it never look back. It has since gone up more than 100% to close at 440Rp yesterday. 





The following is a more spectacular example of how stocks prices being manipulated without much interference from the authorities. It reminds me of our Super Bull run during 1993 where stock prices can double in days. The Indonesian Stock market is now going through a transformation from semi matured to a matured market. I believe sooner or later the authorities will have to come down hard on those stock jobbers and manipulators. The following is the chart of MLPL-w and as you can see when it broke out from the 42Rp level a few days ago, it continued its move upwards and closed at 192Rp which represents a +88.2% appreciation. Earlier it managed to touch 200Rp before it retraced back to 192Rp. A 100% appreciation in one day? This is not a remote case but rather happens every now and then.  





In Malaysia our SC had long clamp down on such moves by suspending the counter and issuing the UMA query. And you know what will happen tomorrow when the counter reopens. This might be good for the authorities to regularise the market so that it will not be too overly speculative. But for the investors, heck this is a free market economy and the stock market is governed by the law of supply and demand. If the demand exceeds supply naturally the price will go up. Moreover by suspending the counter the fortunes of the investors are depended on the whims and fancy of the authorities. We also believe that there are some ‘invisible hands’ at play during the small cap companies run up. If you care to analyse the stock tracking you will be amazed by the number of big blocks of shares (more than 500 lots) change hands during trading hours. These volumes are definitely not from us or you people. We believe these folks have good connection with the powers to be and hence have first hand information on whatever the authorities are about to implement.    

The problem is that in the Malaysian Stock Market, intervention by the authorities can be termed as ‘discretionary’. Some GLCs (Government Linked Companies) can be on the uptrend for weeks and yet no action is being taken. The normal excuse being it is due to the ‘Good Fundamentals’ of the companies. Heck !! does it mean that only good fundamental (crony) companies can have their share prices going up forever?  Does this also help to explain why the retail investors are forever losing money so as to help pay for the operating expenditure of the entire ‘Stock Broking industry’? So to all the retail investors - ‘wise up’ and put your money elsewhere….