TheEdge
KUALA LUMPUR: Surprise, confusion and uncertainty.
These are the words used by the investment community to describe the swapping of portfolios between Prime Minister Datuk Seri Abdullah Ahmad Badawi and Deputy Prime Minister Datuk Seri Najib Razak.
As Najib takes on the mantle of Finance Minister as a prelude to his ascension to the premiership, most fund managers and analysts say it is too early to tell whether this will help stabilise a market that has been battered and bruised by political uncertainty and the meltdown on Wall Street.
While some say that it represents an effort to smooth ruffled feathers in a cabinet that is becoming increasingly divided, others say it could be the start of a comprehensive revamp of the current administration.
Abdullah, who now holds the Defence Ministry portfolio, had said that he could step down as prime minister even sooner.
Most fund managers polled by The Edge Financial Daily said that they would only pass judgment if and when the new finance minister makes his first move.
CIO of TA Investment Management Bhd — Choo Swee Kee
It is a rather confusing move. People will question the reason for the switch and the timing of it as well. Since the Umno elections are coming up, there will already be a fine-tuning of the cabinet then.
The main concern about the switch is that it tends to create uncertainty. It seems as if every week the government comes up with policy changes, which makes it difficult for investors to project the future.
Case in point, when the news came out about the swap, the market reacted negatively because investors were confused and unsure. Going forward we hope to see more stability in the government’s policies.
Portfolio manager for Aberdeen Asset Management Sdn Bhd — Abdul Jalil Rashid
It came as quite a surprise. Perhaps it is Badawi’s way of making a clear point that Najib is his successor, and there has been a call within the party for Najib to be given wider responsibility.
I think he has also been made deputy chairman of Khazanah to give him the responsibility over treasury, future government investments and restructuring, and also perhaps to give him a role in shaping the economic policies of the country.
Although Najib has not managed the Finance Ministry portfolio in the past, he has strong support. Tan Sri Nor Mohamed Yakcop is still there. The prime minister’s role has always been more of a strategic one while Nor Mohamed is more of the executor. Similarly, I think we can expect Najib to have the same role.
This is when Najib gets to show everyone what he is capable of — the Finance Ministry makes or breaks you. This is where policies are made and positions are implemented. If he can show he can implement good policies, this will be a confidence and morale booster when he takes on the top job.
But it is still too early to call how it will affect investor sentiment. We can only tell when he starts implementing policies. This is not a major reshuffle, just a swapping of roles. There will probably be more clarity when he (Najib) starts implementing policies, I think he will be closely watched (by investors).
With so much political uncertainty present now, most are just wishing for all of it to end.
Private equity fund director for KSC Sdn Bhd — Choong Khuat Hock
This helps to enhance Najib’s position during the period of transition. It reiterates that the transition is real and it is going to happen given the importance of the position he was given.
However, there has yet to be a reaction from the market as the cloud of uncertainty still remains. The hope is that Najib will come out with more investor friendly and consistent policies, as it is the recent flip-flop of policies that have unnerved investors.
CIO for Phillip Capital Management Sdn Bhd — Ang Kok Heng
There may be a short-term uneasiness in the market as there will be that initial scepticism on whether he is the right candidate. Most people will be more comfortable with someone who is more relevant.
But we will wait and see. It was like Anwar, everyone wasn’t sure at first because he didn’t have any experience in a portfolio that has to do with the economy.
The sooner Najib has a dialogue session with the local fund managers to share his views and suggestions, the easier it will be for everyone to gauge the condition. In terms of foreign investment, there would be a little uncertainty present as there could be the emergence of new policies and new directions.
OSK Research analyst — Chris Ng
Although this move is a sign that the transition is definitely in the works, political uncertainty still weighs heavily on the market. Hopefully this will indicate a smoother transition of power, which will help end the uncertainty.
But it is really hard to say at this point how this switch will affect the market, which means that the outlook over the next few months will continue to be hazy. However, each leader has his or her own style so most are just waiting to see what Najib does first.
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