While the the spate of attacks on religious sites is cause for concern, Bursa Malaysia has more worldly worries.
Few young adults are investing in the Kuala Lumpur stock market. A survey has revealed that only 12 per cent of investors are in the 20-29 age group, while 59 per cent involve those 40 years and above.
Some have cited possible reasons: the high risk factor involved in investing in the stock market; young people preferring to spend their money on property, cars and movies; a lack of education about how to invest, etc.
I have my own theories.
Perhaps young adults, now with more access to independent information, are looking for more stable, secure investments rather than the speculative roller-coaster ride that is the Bursa Malaysia, especially in these days of economic uncertainty.
Or quite simply, many young adults don’t have enough spare cash to invest as their income levels are unable to cope with the rising cost of living. After buying a house and a private vehicle (due to the inadequate public transport) – and you know expensive those can be – and having to cope with rising fuel and food prices, how much spare cash do you think young adults will have left over to invest in the Bursa? Of course, there are study loans to repay as well.
Some of these young people might even think, why should we let the tycoons with access to capital (the young investors’ hard-earned money) earn huge profits – sometimes in ‘cronyistic’ or monopolistic businesses – in return for meagre dividends? Maybe they can see more clearly through the whole charade?
The other issue is one of confidence – or the lack of it. My emailed query to the Bursa in November 2009 has gone unanswered despite a reminder. I had posed the question to Bursa: if a listed firm fails to meet the minimum 25 per cent public shareholding spread requirement, what is the maximum duration allowed for it to comply? Is there a time limit at all?
You tell me, why do you think young people are staying away from the Bursa?
Young investors have more access to info and no that the “gold” offered by the klse is nothing but a “fleece”. Those days of conning the investors thru market rumours are ove, now the big investors can only play with themselves.
On another interesting note according to chinese astrology, US came into being in the year of monkey, and coming year is tiger year. Monkey and Tiger are enemies, every Tiger Year has seen a Dow Jones crash.
Worse still Obama is 44 Prez of US. Go into market sure die ma.
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Some people saying: stock market is just a gambling den. History proved more people lose their fortune then people profited. The profited from stock market are the people who are at the upper hand. So, if you gamble, better gamble 4D or Casino than gamble in Stock. Just my opinion.
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Dear Anil, well said.
The main reason is still “lacking confidence ” in the local market.
If foreign fund continue to shun this market due to many obvious reasons (political, racial, crime situation, corruption,judiciary,etc), it is like a pool of dead, stagnant water.
The young generation will prefer to put their money into properties and trust funds.
With the fear of price hike in all essential items, the younger generation can hardly survive with their meager income, “shares” to them is definitely a non-essential luxury item.
This country need a total revamp of the economic policy and a restructuring before it is too late.
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From the perspective of a developer, I think the indie scene has been getting plenty of buzz and support in North America. I don’t think it quite hit home here yet but more people are beginning to give the little guys a look.
Be it your mom & pop store, music labels, game devs, software dev, bakery, etc. Big companies are too mired in profit making to consider things like community, creativity(franchises & constant rethread are the flavour of the day), environment, goodwill from customer(yes the opinion of 1 customer holds no sway to these companies).
While they may have programmes that say they do all these good things….they are all akin to 1Malaysia to me. All a big marketing scam.
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The reasons are:
1. Young people do not have that much disposal income to invest. In fact most of them can hardly survived from the 10th day of every month after receiving salary. They then spend their time n effort thinking how to earn “extra” money.
2. They do not trust the Bursa anymore. Rightly so, cs I am there and I know all the dirty dealings. It is just gambling and supporting the higher-ups.
3. Nothing is transparent in Bursa. (Many) just wants to cheat and have quick bucks. A company once listed is a gambling chip. Core business ignored.
Malaysia is just too corrupted and unregulated. It is a country where you can get away if u have money.
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Young people know that only the Mat Salleh funds can move the Bursa. Now, the Mat Sallehs are so scared with all the drama going about.
They have pulled out big time. We will never go back to the 90s bull run if the Mat Salleh don’t come back.
In newspapers overseas, it is now implied that we are a politically instable country. Mat Salleh already scared.
We need the multibillion dollar funds to come in as our retail players in Malaysia all small ikan bilis. They cannot push the market up like how the huge funds from overseas did in the 80s and 90s.
So, our market does not move and does not create any excitement for new players to come in.
Read Malaysia’s Disastrous Capital flight by hte Asian Sentinal.
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=2234&Itemid=229
Another issue is also the heavy duty brain drain. 300,000 people migrated last year, and that is a big problem. That is the biggest capital flight. Mind you, the 300,000 are the educated people who got money. Those who migrate are the ones with the money.
I say this because my migration agent charged me nearly RM18,000 to do my papers. So, you need money to migrate. Not only the paperwork but also initial startup money in the country you migrate. You need at least RM100,000 in cash.
So, 300,000 migrated last year alone. Imagine 300,000 x RM100,000 in cash per person. That is a lot of money taken out of the country and an oppurtunity cost to Bursa.
Also, there are abt 800,000 Msians working overseas. They are not stupid. They all keep their money in their foreign bank accounts as an insurance in case they need to migrate permanently.
Don’t forget also, if 300,000 can leave in one year, in 10 years, 3 million would have left. And these are 3 million educated people with money. All that capital flight…..berpuluh billions, maybe touching hundreds of billions.
So, what is left in Malaysia?
Population about 25 million. Official Bangladeshi and Indons abt 2 million. Unofficial figures, as we know are far more than that.
Take into account the old and the children who don’t work, because of brain drain, the working population would only be a few million.
This few million working population, half of them are kampung dudes, they got no idea what stock market is all about. They are still coming into terms about living in the bandar.
So, where got volume to make up the a strong pool of Bursa investors?
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Those who have little extra cash invest in Singapore and other countries. It was told to me by a VP-Equity for one of the biggest bank,based in Hongkong that they usually wont recommend (unofficially) KLSE due to inconsistencies in Malaysian Government policies.
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I heard lot of ways Bursa regulating the counters. We are not blinds. Dont say young people got money, if they got their money, they will either invest some where or thinking of migration. 20 years ago, the starting pay is RM1500, now still around RM2000. With inflation around 5%. Where is their future?
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Anil,
All the reasons above plus this —>
The younger generations are Net savvy.
They know how to look for relevant information.
They know how to discern bad info from good info.
They know who is lying and who is telling the truth.
And most importantly, they know that KLSE is WAY OVERPRICED — and the index is being artificially propped up by government linked funds such as EPF, Khazanah Nasional and the like.
On the other hand, the older generations — yes, Anil, you and me included — are way more stupid than them.
See what we have done to Malaysia by voting UMNO in for the past 53 years? See what the young ones have done in March 08, 2008?
See the contrast, Anil?
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Oh, btw, Anil, take a look at this link —> http://www.time.com/time/asia/features/malay_terror/cover.html
See how far Malaysia has become…
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You are absolutely right, iron. Today, young generations are much more smarter (mostly rebellious) than older generations (mostly obedient). Why? Young generations were born in the hi-tech age whereas older generations (like me) were born at the time when TV was not even in existence. so, how to compare old folks with young guns, uh?
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Dear Unker Albert,
We were rebellious too, once upon a time. But we were not exposed to so much variety. Our society back then was very simple.
Everything was in Black and White.
Not only TV, but also people.
It was easy to know who are the good guys, who the bad guys.
Today ? Good people steals, bad people saves.
That’s why our young are much smarter than us — it’s that type of environment they are in and they adapt to it by developing the ability to discern the truth from the fake.
Don’t ask me how, I am already way too old to understand the young ones.
And oh, btw, Anil, I dunno where to put this in your blog, it’s about environment and how under BN, mother nature takes a back seat again, this time in Sabah.
http://freemalaysiatoday.com/english/?p=7489
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Was there a time ever when they flocked to the stock market, to start with?
I don’t think we want young people to dash into the KLSE until they have a reasonable amount of savings. Salting away for retirement, children’s education, owning a piece of land, house or condo, i.e. acquiring an asset, are far more important.
Given that dividend yields on KLSE quoted stocks are generally below par, the main reason many over ’30′s flock to the KLSE is to gamble they can make a quick buck in an often highly manipulated market.
Coupled with too many family controlled and Govt owned listed cos, it’s better for these young people to study the market for a few years and undderstand investmenst, before venturing into the KLSE!
dpp
We are all of 1 race, the Human Race
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In Conclusion
The Tiger Cycle in relation to the financial world is unique as every Tiger year for the past cycles going as far back as there are records, the Dow Jones of the USA crashes and here i would like to stress a point that the Chinese character for crisis is made up of the words “danger” and “opportunity”.
“The Dow Jones Crashes Every Tiger Year!”
In every crisis there is a great opportunity for gains and sometimes much bigger gains are being presented. I have known investors that have made a lot of profits from this Tiger cycle and i hope this presentation would caution you to the danger that lurks as well as alerting you to the chance that might be coming your way.
http://hawkeyejack.blogspot.com/2010/01/year-of-tiger-what-portends-in-2010.html
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Those investors (who lost money in) Time Engineering privatization … forever remember KLSE is a junky stock exchange.
I lost several thousand ringgit… Never again invest in KLSE.
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Anil, wrote a comment, what happened to it?
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Sorry it got caught in the spam filter for some reason. It should appear now.
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Bursa Malaysia
The youth group skips investment
Look at it this way
It is still a form of gambling
You buy and sell
Knowing not the future
The way the shares are played
By the “big boys” catching the unsuspected
The money better place
In banks though with low interest rates yet saved
Invest in trust funds and insurance policies
Properties, gold and precious stones
Many may go for lottery
Small investments pay millions
In Bursa Malaysia only hundreds or thousands
Even subscribing for shares
One can be eliminated
and the long queue in boxes
Only the old investors
Habits hardened can’t find ways to change
They may have made some in their lives
So they still flock to Bursa Malaysia
Thinking of the sweetness of yesteryears
Time changes
IT savvy by clicks of a mouse
One can find the many ways to make wealth
Some say
“Look at us
Holidaying making money
IT makes our wealth
Lean our secrets
Unlock your skills
In internet business”
I think Bursa Malaysia
Should change its course
Make it like a lottery
Paying out millions
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Bursa is like a rigged slot machine; a literal one arm bandit. Young people should be wiser not to gamble their hard earned salaries into slot machines. It is not even a fair game of chance now. Tales of ‘burns’ and ‘wipe outs’ from older peoples should be enough to cultivate a more discerning younger generation. Bursa is a reflection of an unreformed and spoiled Malaysian economy. Yeah….even I am extremely annoyed by this charade “…why should we let the tycoons with access to capital (the young investors’ hard-earned money) earn huge profits – sometimes in ‘cronyistic’ or monopolistic businesses – in return for meagre dividends? Most of the times, we cannot even get the meager dividends.
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Hi uncle Anil…
I found your blog on the internet and I think its very nice. Keep up the good work!!
XXX
Alysha!!
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