BURSA Malaysia has been on a downward trend this year, but the drop accelerated in August, made worse by last week’s global market turmoil. Since Aug 3, the local bourse has seen its market capitalisation shrink by RM142 billion.
Malaysia’s richest have not been spared, as tycoons saw their net worth dwindle over the last month. In total, the country’s six billionaires lost a whopping US$6.37 billion between Aug 3 and 26, close to 20% of the total market capitalisation that has evaporated from the local stock market since Aug 3, according to the Bloomberg Billionaire Index.
Malaysia’s richest man, Robert Kuok, who is also known as the “Sugar King”, saw his net worth decline US$2.01 billion to US$13.66 billion on Aug 26 from US$15.7 billion. It is worth noting that the bulk of his known asset value is derived outside Malaysia. The biggest chunk of his wealth comes from his 32% shareholding in integrated plantation company Wilmar International Ltd at US$4.1 billion. This is followed by his stake in Kerry Properties Ltd and Singapore-based Allgreen Properties Ltd with US$2.1 billion each. His stake in flour milling and food processing player PPB Group Bhd contributes US$1.1 billion to his wealth.
The decline in his net worth during that period can be attributed to declines in his Hong Kong-listed Kerry Properties, which fell 20.28% to HK$22.80 on Aug 26 from HK$28.60. This was followed by Singapore-listed Wilmar International, which fell 13.67% to S$2.74 during the same period. PPB Group was relatively stable, falling marginally by 3.84%.
However, the Sugar King was not the biggest loser in the recent stock market rout. The country’s fourth richest man, according to Forbes, Tan Sri Lim Kok Thay’s net worth shrank by 22% during the period to US$3.84 billion. Lim inherited Genting Group, Southeast Asia’s largest casino operation, from his late father Tan Sri Lim Goh Tong.
According to Bloomberg data, Kok Thay derives US$2.5 billion from 42% ownership in Genting Bhd and US$1.2 billion from 48%-owned Genting Hong Kong Ltd, which operates cruise ships. Genting Bhd saw a significant loss in its share price in August, as it fell 20.19% to RM6.64 from RM8.32 previously. In addition, Genting Hong Kong tumbled 11.61% during the period to HK$2.36.
While these tycoons may have already recovered some of the losses as the stock markets rebounded after Aug 24, market observers say it is not over yet as volatility remains at high levels.
The downward spiral of equities since Aug 3 can be traced back to the time shortly after the ringgit breached the psychological level of 3.80 against the US dollar. It was made worse when a global selling frenzy took hold on Aug 24, sending the benchmark index to an intra-day low of 1,503.68 points, the lowest level since January 2012.
Fingers were pointed at China, where the panic selling on its stock market — triggered by concerns over the health of the Chinese economy — caused a chain reaction that sent stock markets worldwide crashing. China’s Shanghai Composite Index took its biggest one-day fall since 2007, sinking 8.5% by the end of Aug 24. The Dow Jones Industrial Average was down 586 points or 3.56% by the end of the day. The Dow fell as much as 1,000 points during the day, rattling many investors.
Since Aug 3, the FBM KLCI has fallen 12.16% to 1,532.14 on Aug 24. Year to date, the benchmark index has retreated 9.06%. Similarly, the FBM Emas Index fell 12.54% to 10,485.14 between Aug 3 and 24. Notably, the local indices and the ringgit have been moving in tandem since the beginning of August as the ringgit has continued to decline until it hit a record low of 4.19 recently against the greenback.
Nevertheless, the stock market appears to have rebounded since Aug 24. Last Friday, the benchmark index closed at 1,612.74 points while the FBM Emas Index ended the week at 10,976.04.
With the market rebounding, is it time for investors to head back?
“It is a dangerous time to invest in the stock market because it is fluid and fast changing. It is hard to determine the equilibrium level but there are still trading opportunities during this recent rebound,” says Inter-Pacific Securities head of research Pong Teng Siew.
Nevertheless, he opines that investors would be better off keeping cash now, which would give them flexibility in their approach going forward. He adds that it is highly possible another selldown will occur.
“Investors have to be nimble during such times, watchful for opportunities to sell and quick to take profits,” says Pong.
This article first appeared in Capital, digitaledgeWeekly on August 31 - September 6, 2015.