Many observers seem to think that the spate of management buyouts, General Offers, privatisations of listed companies is a good thing. Of course this is a very bad thing. If it was infrequent, then we can say it may be positive. The rate at which it has been happening means that investors are not according the "right valuation" for these counters.
If you still think this is not a problem, then you must be aligned with BN. The main troubling aspects which led to this: corporate transparency (or lack of); too many injudicious RPTs; trampling over minority interests (too many to mention); institutionalised corruption and leakages; and mismanagement of resources and GLCs. All that are important contributors, but none is as significant as the crowding out effects by local funds holding way too much stocks.
If you can track the amount of shares held by the big boys, namely EPF, PNB, etc... over the last 10 years, in particular over the last 5 years, you'd have a very good idea what has been happening. This crowding out effect causes foreign institutional investors to continue to avoid or reweight their exposure to the detriment of Malaysian listed counters. They feel that the index is overly "controlled", susceptible to "manipulation", and a dire lack of free float.
The more the local funds control, the easier it is to push through sweetheart-deals, which is not palatable to most investors. Even local private investors have been feeling the same way. Ask anyone you know, they are mostly holding A LOT LESS STOCKS NOW compared to 3 years or 5 years ago. The disillusionment is palpable.
EPF and PNB can say that they have way too much funds inflow and just have to keep upping their stakes. You and I know the dangers of that. Every year they could actually trade some of their shares higher by 5%-10%, close it higher and pay out dividends - although it is not as sinister as it sounds, this resembles a Ponzi scheme. Till it it gets to a stage where it is so easy to move the shares 5%-10% every year and the dividends keeps everybody's mouth shut. Who is there to whack the shares down if the fundamentals don't really match up?
We must have a roadmap to reduce all local fund holdings to less than 20% as they are not in it to "control or run companies" (hello, PNB, what are you doing with SP Setia???). All listed GLCs should have the government holding no more than 35%, why the need to hold more???
We also need EPF to energise their rules for allowing individuals to do their own investing, this will reduce the burden every year for EPF. Right now, the scheme is good, allowing individuals to invest in "qualified funds on their own". However, something must be done to the stupidly high 3% fee to do so. A more reasonable rate should be just 1%. Do you know that most of these type of funds in the US charges less than 0.5%, some are even entry free as they have yearly management fee. The second part is to make all the "qualified funds" to charge no more than 0.75% fees a year.
So, there you have it, we will not know what hit us until one day all the "decent companies" are privatised, and we are left with GLCs and punting stocks. What a wonderful stock market we would have then!!!