Financial thoughts

Malaysian Prime Minister Abdullah Ahmad Badawi said he'll introduce measures to help the poor and attract investors to the stock exchange after his ruling coalition's worst election showing.

“The result of the elections was a strong message that I have not moved fast enough in pushing through the reforms that I promised to undertake,'' Abdullah said today at an investor conference in Kuala Lumpur. “Point well made and point taken.''

Abdullah is seeking to reassert his authority and revive market confidence after opposition parties won almost half the states contested in the March 8 election, sparking concerns building contracts under a 200 billion ringgit ($62 billion) development plan will be delayed. Malaysia's key share index gained today after the premier said he'll push ahead with reform and projects across the country to promote growth.

Malaysia's stock exchange, partly owned by the government, will combine its main and second trading boards, Abdullah said today. The ruling coalition lost its two-thirds majority in parliament for the first time since 1969.

“Abdullah needs to carry on with the projects he announced,'' said Lye Thim Loong, who helps manage the equivalent of $593 million at Avenue Invest Bhd. in Kuala Lumpur. “He has to make sure they are executed well to win back confidence.''

`Very Forceful'

The country's main stock index rose as much as 2.2 percent to 1,227.01 after Abdullah's speech. It climbed 2 percent to 1,225.36 at the 12:30 p.m. break in Kuala Lumpur, set for the biggest gain in almost two weeks.

Analysts including CLSA strategist Loong Chee Wei had said property projects in Malaysia may be delayed because of spats between the federal government and opposition-led states.

Building stocks including IJM Corp., MMC Corp. and Gamuda Bhd. climbed today after Abdullah told reporters there's no sign Malaysia's construction industry is slowing, and he'll proceed with development contracts at a state and national level.

Abdullah “was very forceful,'' said Stephen Hagger, a Kuala Lumpur-based analyst at Credit Suisse Group who attended the conference payday advances. Still, “it may not be sufficient given the turmoil in the U.S.''

Malaysia is fighting rising food costs triggered by record crude oil prices, and slowing growth in the U.S., the Asian nation's largest export market. Abdullah said the country can weather a slowdown in the world's largest economy as he announced measures to boost financial services at home.

`More Competitive'

The government will make it easier for Malaysian companies with top credit ratings to sell ringgit-denominated debt by exempting them from certain approval requirements, he said.

“It will allow our private sector easier and more competitive access to capital,'' Abdullah said in his speech.

Malaysia's government, which spent about 35 billion ringgit last year subsidizing gasoline and natural gas costs, will keep fuel prices at the pump on hold, Abdullah told reporters after his speech. He said a policy to address the subsidy would be announced later, and he didn't specify what measures would be introduced to help the poor.

“The best thing is you just wait,'' the prime minister said in response to questions about subsidy levels. “It is among the very early decisions that we are going to announce.''

Second Finance Minister Nor Mohamed Yakcop told delegates at the conference that some income groups would receive direct payments from the government, replacing current subsidies benefiting the rich and poor.

Calls to Resign

The ruling coalition's election setback has also prompted some party members including former premier Mahathir Mohamad to demand Abdullah's resignation. The benchmark stock index on March 10 plunged 9.5 percent, the most in a decade, wiping $27 billion from the value of the market.

The government said in July last year it expects to generate 177 billion ringgit of investment by 2025 to spur growth in the nation's northern states. The area includes Penang, Perak and Kedah, three states won by the opposition parties.

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