Why KLSE always face heavy impact in the bear run?
In the development country, the monetary (share) market performs well 5 times than Malaysia share market. Why?
There are few reasons: -
a) Free on cash inflow and outflow. (Liquidity easy).
b) Short selling allowable.
c) Transparency on procedure or law.
d) Enforcement democratic.
That is very important to investors, because the investment funds could not tighten up unreason way.
To develop a healthy and quality shares market, The short selling system is very important because: -
1) Easy to stop the unreasonable evaluation on the company assets and turnover
2) Retain back national fund. Because while bears market start, the foreign investors usually manipulate the news/media and sometime purposely declared that negative analysis report to divert people attention. So, if short sell allowable. National people can sell share in advance and buying back in the lower price. It automatic created a group of supporter in the lower price.
3) The company NTA and substantial turnover become very important for every company. Indirectly promote company was listed in KLSE is a quality proof company.
4) Directors hold more responsible to retain the assets and business.
5) The paid up capital for every company may increase to another high levell.
6) The turnover per day of trading shares in KLSE increase substantially
If preventing short sell, we indirect: -
a) Agree our listed company is no quality proof.
b) Encourage someone created a bomber on valuation.
c) Allow small investor discrimination by major shareholders.
d) Allow directors less responsible to company assets.
If we compared with Taiwan, HK, DJ, FTSE100, and Tokyo shares market. The said develop market never worry about short selling system. Because the quality company has been listed and never worry about the company will be devalue by investors.
The system applied by develop coutry proven that alraedy minimise the impact on lower price and recover soon in the future.