Firstly, you have to allow for some leeway for speculation or else no one will play the stock market, thats the reality. Cowboy activities are part and parcel of any healthy bourse anywhere in the world, let's not kid ourselves. You need some speculation.
The UMA is as effective as mentioning Uma Thurman to the companies, who cares? Investors need to have a better guiding light than the current "system", whereby an UMA is a first sign, usually ineffective as shares will still gallop. A better way would be to give "danger signal" instead of a sudden outright designation. A sudden designation is so up in the air, it could be implemented for Harvest at 50 sen or RM1.00, why RM1.70 or RM2.00? Its so subjective and this gives rise to potential "insider information" for those in the know to "dispose shares first just prior to designation.
The usual UMA could be issued, and if the shares continue to be rampant then issue a "danger signal". OK, what is "rampant", lets set a ballpark of 100%-300% gain within 2 weeks. If it continues to be that way, then issue a new warning, let's call it I.D. SC could issue a subsequent Imminent Designation if there continues to be rampant speculation after the issuance of an UMA. Then investors will know beforehand that this counter could be, might be designated within the short term if excessive speculation continues.
At least an I.D. would cool investors participation and calm things down without setting off enormous collateral damage to sentiment and on other stocks as well. If you continue to play the stock after an I.D., then you deserved to get whacked royally when the designation happens.
Of course the SC cannot be too vigilant or too quick to issue an I.D. following an UMA, or else that will kill off activity after any UMA. This is just one proposal, I am sure there are better ways of handling over speculation rather than the current subjective system.
7 June 2006.
Securities Commission Malaysia,
Securities Commission (SC),
No 3, Persiaran Bukit Kiara Bukit Kiara, 50490 Kuala Lumpur BY HAND