Clap! Clap! Clap!
Well well well.. Najib Tun Razak is doing very well following his mentor’s footstep is his latest true ‘Mahathirism’ style. He is going to rob borrow our hard earned money, our pension saving inside Employees Provident Fund in the tune of RM5 billion. Reason? To invest in undervalued companies in the share market (read: to prop up the share market.)
Remember the old man hobby when he was the most powerful man in Malaysia? EPF, Tabung Haji and Petronas were his ‘piggy banks’ – source of unlimited funds to finance his appetite. The old man ‘borrowed’ EPF monies to fund Putrajaya, and most mega projects (and cronies, of course.) According to an estimation carried out in 2002, EPF contributors had loaned Federal Government some RM90 billion at low interest rates to finance its mega projects and to bail out crony companies.
Abdullah refrained from using EPF monies as he firmly believed that the government must not gamble on peoples’ pension savings. Kudos to him.
Now Najib Tun Razak is going to get EPF to pump in RM5 bil into this third party company, a very secretive fund/asset management company to support share prices. Are we seeing another Mahathirism here?
KUALA LUMPUR, Oct 21 — Finance Minister Datuk Seri Najib Razak said today the government will borrow RM5 billion from the Employees Provident Fund to fund government investment agency Valuecap Sdn Bhd.
“It’s not part of the Consolidated Fund. It’s a loan from EPF,” said Najib.
The Deputy Prime Minister pointed out that the loan would not be part of the Budget 2009 allocations for spending announced last month.
Yesterday, Najib announced a host of measures to boost the economy and protect Malaysia from the effects of the global financial turmoil.
These included spending more on the service sector to cushion expected declines in Malaysia’s exports.
Also, RM5 billion would be injected into Valuecap to buy undervalued stocks.
Valuecap was set up five years ago to invest in undervalued firms.
The government hopes the injection will offer much needed support for laggard blue-chip stocks in the local bourse.
(Source: The Malaysian Insider)
Toe in line, our Second Finance Minister is fast to support his boss on this move.
KUALA LUMPUR: The Employees Provident Fund (EPF) will make a profit from the RM5bil that it will lend to the government investment agency, Valuecap Sdn Bhd, to support the local stock market, said Second Finance Minister Tan Sri Nor Mohamed Yakcop.
He said this was based on the past performance of Valuecap which has grown its portfolio from RM5bil initially to RM8bil now.
“I believe that they (Valuecap) will do well and EPF will certainly get its returns.
“Valuecap has done well. It has a good infrastructure, good staff who know better about the market and have a knowledge of what is happening (in the global market),” he told reporters after giving closing remarks at the Khazanah Megatrends Forum 2008, here yesterday.
He said this in response to Deputy Prime Minister Datuk Seri Najib Tun Razak’s press conference yesterday that the Government would borrow RM5bil from the EPF to double the size of Valuecap to RM10bil.
Established in 2003, Valuecap is a fund management firm created to invest specifically in the Malaysian equity market and is jointly owned by Khazanah, PNB and Retirement Fund (Incorporated). – Bernama
(Source: The Star)
There are few issues to address here.
1. Why the need to inject fund into another company in order to buy up undervalued shares?
Isn’t EPF itself is a professional investment entity, seeking optimum returns from its investments for the shareholders? Doesn’t EPF also has its good and capable staffs that knows the market well? EPF investments also involves buying up equities no? Is EPF not confident enough to things on their own? Let EPF and its investment board or panels make their own decision to invest in any company, taking into account with what is happening in the global market without being ‘forced’ by outsiders, especially politicians.
2. What is this Valuecap Sdn. Bhd. about? Who owned this company? What is Valuecap’s real role?
Valuecap is owned by Khazanah Nasional Bhd, Permodalan Nasional Bhd (PNB) and Kumpulan Wang Amanah Persaraan (KWAP). It was set up in 2002 when the Kuala Lumpur Composite Index struggled to break past 650 points.
The idea was that Valuecap’s acquisition of shares – it was reported that it would have RM10bil in funds – would boost the stock market. There are mixed views on its effectiveness and part of it may have to do with the fact that Valuecap has rarely publicised its activities, strategies and performance.
From the Khazanah’s website,
Established in 2002, Valuecap is a fund management company which was created to invest specifically in the Malaysia equities market. Owned jointly by Khazanah, PNB and KWAP, Valuecap’s key mandate is to undertake investments in equities listed on Bursa Malaysia on a portfolio basis, based on superior fundamental investment research.
In simple explanation, Valuecap’s job is to support share prices, as the name implies. It tries to cap the value of share prices from falling further from their ‘real’ value. Do we really need a company to buy up undervalued shares to prop up the shares prices? Is this necessary in the current economic slowdown?
What happened to the RM10bil that Valuecap received before? Any accounts showing that they have made fantastic profits? This is a good information on Valuecap Sdn. Bhd – Company Profile.
3. What makes this Valuecap Sdn. Bhd. so special for it to be chosen as the ‘saviour’?
Useless, moronic Second Finance Minister. EPF will make profit from the LOAN? EPF will only give out the loan and not investing that RM5bil so how to make profit? So are we getting paid interest, and if yes, when? There is a difference between an equity investment and a loan. How can EPF makes profit if it does not invest? How can past perfomance GUARANTEE future profits? Hell, I believe I will be rich and become the first Chinese PM of Malaysia in the future, but then… I certainly do not believe this idiot after many stupid things he said before. Lastly, Valuecap Sdn. Bhd. has good staffs and infrastructure but so did the badly affected investment banks in US and Europe, what is so special about Valuecap Sdn. Bhd.? Probably Valuecap Sdn. Bhd should offer their service to them as well?
4. How will supporting the prices of stocks listed on Bursa Malaysia, buying shares of few companies actually change the fundamentals of our economy?
Is this RM5 billion to gamble in the share market really necesary?
It is a great theory, buying undervalued shares (as astute investor Warren Buffet did) but in this situation, how to identify blue companies? Blue chip may not be so blue after all, especially in Malaysia. AIG used to be a damn blue chip company, before it needed bailout to stay in business. Lehman Brothers went bankrupt, who would imagine that to happen before? In current situations, all past records go out of the window. How do we know what the real value of the company is? Injecting funds into the market only acts as a window dressing for the share market.
The share market is not important, really. The general population will not benefit from the artificially inflated stock market. Leave the stock prices to market forces. Conventional wisdom has it that the stock market/exchange should be allowed to find its own level, and market forces not be interfered with. Over the longer run the government can’t fight the market to win.
There is no point for the government to prop up the market when it is a worldwide problem. The situation is not just about the stock market. F**k the stock market. If the goverment decided to prop up the market, many opportunists out there may take advantage of the situation (Valuecap’s injection of funds) by concentrating only on certain blue chips. Traders will only be taking advantage to sell if price push up at this time, and it is no secret that most ‘blue chip companies’ are Umno or government supported companies and certainly these companies will cash out the moment money is made.
One cannot see any logic in buying in now when possibility of losing is greater unless to save some cronies. The very act of intervention erodes confidence because people perceive the market to be so ailing that it requires such a drastic measure. Only desperate times spawn desperate measures. Why should any government be buying shares in the stock market? How do you determine what stocks get bought? Doesn’t this tantamount to market manipulation? How is this going to help the average person struggling to make ends meet?
Share price and share value are different things. If our share price is indeed below real value, let smart and astute investors buy the shares. Why should the government come in to intervene especially through tax payers’ moneys or hard earned savings of the rakyat through EPF? EPF is not the banker of the government, if contributors are not allowed to borrow their own money from EPF, what right does he has to use our money for government’s needs.
5. Since it’s a loan, are we getting paid interest and when are we going to be paid back in full?
Money should be used for some productive purpose and not solely speculative purpose. save the RM5 billion and use it for other purposes – for banks in case they have liquidity problem and stop lending, loans to small and medium enterprises (SME). No country is dumb enough to prop up their share market now. Responsible governments all over the world are using money rescue the financial system so that the little guy will not be put out on the street. To use our hard earned money to bail out a few fat cats who got run over by the stock market crash is a doing of an irresponsible government. Why should a few people benefit at the rakyat’s expense?
Najib, a true blue boy of Mahathir is following his mentor’s footsteps, using EPF as his piggybank and yet we are left wondering, why is EPF always doing so poorly, and giving so low dividends to the contributors? Now you know.