Funds to buy undervalued stocks raised to RM10bil

Tuesday October 21, 2008
Funds to buy undervalued stocks raised to RM10bil
By FLORENCE A. SAMY
Malaysia ideal as hub for international dispute resolutions

KUALA LUMPUR: The Government has doubled the amount of money available to buy undervalued stocks to RM10bil and will also continue with its spending to boost the country’s economy. Finance Minister Datuk Seri Najib Tun Razak announced that these two moves were part of the Government’s plan to ensure that the economy would not be affected by the global financial crisis caused by the meltdown of banks in the United States. “The country is not in a financial crisis and we certainly should not talk ourselves into one,” said Najib during his keynote address at the Khazanah Megatrends Forum yesterday.

However, he warned that the country should brace for a lower economic growth next year in view of the global slowdown.
Among the measures Najib touched on were:
> INJECTION of RM5bil to double the size of Valuecap Sdn Bhd that was set up by the Government in 2003 to invest in undervalued companies;
> REVIEW of some foreign investment committee guidelines to make it more attractive for foreign investors, especially in the property and commercial sectors;
> LIBERALISATION of the service sector to attract more investment and generate more local employment;
> RE-PRIORITISING projects with focus on those that can be implemented expeditiously and with high economic multiplier effects; and
> STRENGTHENING of small and medium-scale enterprises through new initiatives by financial institutions and access to special Bank Negara funds.

Najib, who is also Deputy Prime Minister, said he would give more details in Parliament on Nov 4 during his Budget winding-up speech. On Valuecap, Najib said the funds were being pumped in given the current opportunities for value investing. “The stock market has many fundamentally strong companies. Many companies are presently trading at attractive valuations, creating opportunities for value investing.”

On re-prioritising projects, Najib said some “lumpy projects” with little economic multiplier effects could be postponed but promised that the Government would continue with its spending.
“The planned expenditure for 2009 will continue and there will be no financial cutbacks. This position was agreed upon by the National Economic Council executive council under the chairmanship of the Prime Minister.”
He said short-term measures to tackle external financial turmoil should not come at the expense of the country’s long-term development and global competitiveness. Najib also slammed the West who “incessantly lectured and hectored us to adhere to their advice (10 years ago during the Asian financial crisis).” “Ironically, they have now unfortunately failed to live up to their own high standards of lending and regulatory functions they had expected of us,” said Najib.