Deputy prime minister cum finance minister Datuk Seri Najib Tun Razak announced that the government would pump RM5bn into Valuecap Sdn Bhd so that the latter could invest in undervalued stocks with strong investibility.
With this RM5bn injection, Valuecap will have a capitalisation of RM10bn, and the market remains concerned what the government will do next to rescue the equity market.
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The recent Malaysian government intervention in the equity market is put into context of the global credit crisis. I'm not sure how sound the economic thinking is, but I felt lost at times. It is especially difficult to get the writer's point when he mixes his metaphors. Admittedly this has been written for a local audience. I am unsure of the thinking behind erecting a early credit warning system and it doesn't seem backed up by the rest of the article.
To better tackle the current financial storm, the US government has finally decided to call a global financial summit to push ahead global financial reforms. Although President Bush agrees that the US financial system needs to be modernised and fortified, he stresses that any reform solution must not deviate from the fundamentals of “democratic capitalism,” that is, free market, free enterprise and free trade must all be protected at all costs. Ironically, Washington’s latest move to inject funds into banking institutions is an act of outright socialism.
So what?
A deeper examination of the current Malaysian economy, would have been appreciated. For example, some of the decisions that lead to the fund injection for further context. It is unhelpful that the writer examines the intervention with relation the global crisis. Many of the assumptions he makes are specious, like such as fund injection is the preferred type of government intervention.