Securities Commission should hold a public inquiry into the manipulation of the KLSE and the 15 percent plunge after Daim Zauniddin‘s ‘Get Out Now’ report

By Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjong, Lim Kit Siang, in Penang on Sunday , January 23th, 1994:

Securities Commission should hold a public inquiry into the manipulation of the KLSE and the 15 percent plunge after Daim Zauniddin ‘s ‘Get Out Now’ report

Government economic adviser , Tun Daim Zainuddin , yesterday blamed the star for causing panic selling on the Kuala Lumpur Stock exchange two weeks ago , and said that the Star had ‘irresponsibly “ used a misleading heading in its report which caused the panic selling”.

The former Finance Minister said that the star had used the heading “ daim :get out Now , Don’t say We didn’t Tell You” for a Bernama report on Jan 11, and that the Star had rewritten part of the Bernama interview with him.

Tun Daim Said : the heading suggested that I asked them to sell when I never uttered such words . The newspaper had acted irresponsibily by using sensationalism .”

This is a most serious allegation , for the panic selling from January 11 as a result of Daim ‘s bernama interview caused a plunge in the KLSE by 180 points in the Composite Index (CI) in three days , burning tens of thousands of small investors and even causing a few to take their own lives.

The KLES was due for a correction at that time , but clearly not for the deep plunge from January 11 as a result of Daim’s Get Out Now, Don’t say We Didn’t Tell You “ news report.

Thus , the latest issue of the economist weekly , in a report on the KLSE plunge entitled ‘Malaysian meltdown ‘ said :

A sharp correction seen in other East Asian markets too had been turned into something closer to rout by remarks made by Daim Zainuddin ,a former finance minister of Malaysia, currently treasurer of its dominant political party and a prominent investor . The combination of political connections and corporate clout have made Mr . Daim Malaysia’s best – known stockmarket guru.

“in the past year the surest way to spark a speculative surge in a particular share has been to start a rumour that interests connected to Mr. Daim were behind the compant . So whn Mr. Daim told the Malaysian news agency that the stockmarket boom had reached a ‘ dangerous stage and that he had cashed out apart from a few blue chips investors responded with feverish selling . It was , remarked a western diplomat , like the American Treasury secretary saying that he had lost faith in the dollar.”

Now , Tun Daim claims that he should not be held responsible for the panic selling in the KLSE from January 11 and that it was all the fault of the ‘ irresponsible sensationalism ‘ of the star.
Why didn’t Tun Daim make an immediate correction the next day – instead of waiting 12 days later , after the KLSE total market capitalization had plunged from its peak of RM 613billion on December 13, 1993 to RM 496 billion on Januart 13?

In falling to make an immediate correction to the irresponsible sensationalism of the Star of his Bernama interview , Tun Daim cannot escape responsibility for the lessons suffered by tens of thousands of small investors – even if his accusation against Star is right.

What has happened in the KLSE has shaken public confidence in the integrity of the stock market and the Securities Commission. The Securities commission should hold a public inquiry into the manipulations and the 15 percent plunge in the stock market after Daim ‘s Get out now Interview on January 11, 1994 to restore public confidence of the small investors.

Such a securities commission Public inquiry should focus among other things , on the following issues:

Tun Daim’s Get Out Now , Don’t Say We didn’t Tell You” report in the Star and why he didn’t issue an immediate correction the next day;

Revelation by KLSE general manager , Salleh Abdul Majid of syndicated using remisiers to influence gullible investors with rumuors rather than fundamentals;

The manipulation of the KLSE by big corporate players , particularly those with connections to UMNO or UMNO leaders

Whether the KLSE plunge had been the opportunity for the raising of election funds for UMNO for the Sabah state general elections ; and

The effects of Bank Negera ‘ currency operations on the KLSE plunge.