by Parliamentary Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Siang, in Petaling Jaya on Friday, December 6, 1985.
What is the justice of the 300-odd list of companies suffering a $10.8 billion loss yesterday when the three companies most closely related to the principal actor of the Pan E1 crisis are protected by their suspension from stock exchange.
After the three-day closure because of the Pan El crisis, the Kuala Lumpur Stock Exchange re-opened to experience the sharpest plunge in one day for years, with the KLSE index dropping by 378.66 – the first time the index has dipped below the 400 point mark in over two years.
It has been estimated that the wave of panic selling yesterday wiped off $10.8 billion from the value of all shares listed before the three day closure of the KLSE. According to one calculation, the market capitalisation of all 283 companies listed on the KLSE plunged by one-sixth or $10.8 billion from $64.2 billion on last Friday’s (Nov. 29) value to $53.4 billion.
Invariably, the biggest victims of the stock exchange collapse in price are the small investors. A number of them have asked me what I feel to be a very legitimate question: i.e., where is the justice where the small investors and the 300-odd listed companies should suffer losses ranging from 20% to 30% of last Friday’s share price, amounting to $10.8 billion, when they are completely innocent parties, while the three companies most closely related to the principal actor of the Pan El crisis are protected from such losses by their suspension from the stock exchange.
They also question whether it was just and right for the KLSE to agree to the request by the three companies, Supreme Corporate, Grand United Holdings and Everpeace Corporation, to be suspended from the exchange until further notice.
They said that the two reasons advanced for the suspension of these three companies apply to all other companies: namely, ‘widespread speculation’ and ‘extensive publicity concerning the financial difficulties presently being experienced by Pan El.’
Given a choice, in the face of the stock market conditions created by the Pan El crisis, the other listed companies would have preferred to be suspended from trading too, until confidence has returned to the market.
The small investors are particularly aggrieved that with the plunge in the share prices, the only beneficiaries are the three companies of Tan Koon Swan as they maintain their re-closure prices because of the suspension and need not face problems other companies would immediately face, as with the dimunition of their share values, the banks and other creditors would be calling back their loans.
The KLSE owes an explanation the other companies, the small investors, and the general public as to whether it is right that it should accede to the request of Supreme, Grand United and Everpeace, to suspend from trading, which in effect gave protection to these three companies at the expense of the other companies, when it is these three companies which are more closely connected to the Pan E1 crisis than the others through their association with the principal actor of Pan E1, Tan Koon Swan.
It is speculated that if Supreme, Grand United and Everpeace are not suspended, they would take a sharp fall as much as 50%, but if the other companies not in any manner related to the Pan E1 crisis had to take 20-30% fall in share prices, why should these companies get special protection and immunity?
UNICO should hold a general meeting to seek the approval of its 25,000 shareholders on the UNICO-Grand United deal.
The public ceremony yesterday of Tan Koon Swan and Datuk Wong Tok Chai on the signing of a ‘Letter of Intent’ whereby Unico Holdings Bhd. Would participate in the equity and management of Grand United Holdings group if companies is most intriguing, especially in its timing.
I am sure the public reaction is that this is one of the ‘rescue operations’ in the face of the Pan El crisis. It is not for me to comment on the wisdom or otherwise of the UNICO-Grand United deal, but in view of the extraordinary circumstances of the three Tan Koon Swan companies which have led to their own request to be suspended from the stock market, a general meeting of the 25,000 UNICO shareholders should be summoned to get their endorsement for such a ‘Letter of Intent’.
Tan Koon Swan has declined to answer a question yesterday whether UNICO would take up the Pan E1’s forward purchase of Grand United shares, which triggered off the Pan El crisis. At first the Pan E1’s forward purchase to Grand United and Supreme shares were estimated t be S$140 million, but now reports from Singapore have it as high as S$250 million.
As it is Pan El’s forward purchase of Grand United and Supreme shares which had triggered off the Pan El crisis and the plunge in the KLSE and SES, Tan Koon Swan should not withhold full particulars on these forward purchases any longer.