The professional views expressed by the financial community must be recognized and affirmed, and the Government has to give guidance on the structural deficiencies in the stock and real estate markets.
If the Malaysian economy continues to advance, the domestic stock and real estate markets should develop steadily, in line with the economic situation. A market price is determined by supply and demand, and the domestic stock and real estate markets are enjoying steady development, mainly because the excess supply in the market in the past has been improved.
With sufficient capital and funds in the market, supply and demand can be deployed properly, so naturally the prices will stabilize. Hence, the current stock and real estate market conditions should continue to maintain equilibrium through the natural adjustment of the economic system.
According to the economic indicators recently observed, the Malaysian economic growth rate this year will remain above 6%. Although some industries may suffer poor performance, as goals of the economic transformation in Malaysia have been set, so earnings will be good in industries such as the electronics, information and technology industries.
The Malaysian foreign trade had registered growth in the fourth quarter last year, even though the economies in Europe and North America have been weak.
In November last year, Malaysian imports remained at double-digit growth. On the other hand, export orders also reflect that the current prosperity will continue, and this shows that the economic situation in Malaysia is not so gloomy.
Hence, it is certainly normal to expect the stock market performance to move steady upward. But the government should guard against the stock market expanding too fast, leading to what is known as the "bloated" phenomenon.
According to the Kuala Lumpur Stock Exchange statistics, there were nearly 800 listed companies in 2008, but the number has increased to 957 at present.
In the stock market, the share prices of some listed companies which have been performing well are still rising, especially the financial and plantation stocks.
On the other hand, the performance of many listed companies fell due to poor financial health. And it is only the result of natural market adjustment that the heavy FTSE stocks that have long suffered from too high price earning ratio (PER), so investors no longer favour them.
In fact, the situation in the market is but a reflection of the gradual transformation of the market, with the stock market returning to using the performance of listed companies and reasonable PER as the basis for evaluation being a normal trend.
In the real estate market, the government should be aware of imbalance in supply and demand. In the past the industry created a loop by pushing up housing prices, and finally, under the increasing gap in supply and demand, the high-grade spiral lost its strength, which led to falling prices and even bursting of the bubble.
According to statistics, 78% of the population in Malaysia has his or her own house. Hence in theory, it is impossible to maintain the long-term rise in real estate.
Developers under the lure of profits participate in speculation and create over-supply. Once the supply of a large number of houses is released, the growth in demand will slow down, the inevitable collapse of the phenomenon will happen. This will in turn have an impact on the banks whose main businesses are in real estate loans, and the proportion of overdue loans in the financial industry will soar.
Whether the stock market or the real estate market, disorders appear when the government legal system fails, or the tax system is unreasonable.
In the past, prices in the stock and real estate markets boomed, and the market speculators profiteered easily, mainly because of excessive supply in market causing prices to plummet eventually. The reason that market profits existed in the past is due to the exemption of securities transactions tax by the government and serious deficiencies in the land tax system.
This has also resulted in the continued expansion of the gap between the rich and poor in the country, and therefore the fairness of the tax system is also questioned.
Hence, the government should no longer delay the implementation of related amendments to tax laws for the securities trading tax levy, and tax for land transactions.
The government should also act to prevent excess supply, so that the market can maintain its equilibrium and momentum. For the latest updates PRESS CTR + D or visit Stock Market news Today
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