Now is the time to pile on the bad news

I read this article covering an analyst basically saying that “now is not the time” for bad news. Rather it is the time to rebuild confidence among investors. Interestingly the analyst also highlighted the fact that there is a possible US-China trade war and emerging economies such as Malaysia could be hurt.

Bad news must be kept at bay, says an analyst, saying it was time Putrajaya rebuild confidence among investors against a backdrop of a possible US-China trade war that could hurt emerging economies such as Malaysia.

Hoo Ke Ping said while it was important to announce that the government was cleansing the system it inherited, Prime Minister Dr Mahathir Mohamad must immediately take on the role of the “salesman” to encourage foreign investors to stay on, while attracting more of them.

“Just keep the bad news and politicking to themselves for the time being,” Hoo told FMT, amid criticism that being “honest” about the critical state of the nation’s economy could backfire on the present government.

There have been many such calls in one form or another. This one interested me because it takes into account the “time”, and noted the possible effects of the US-China trade war.

I have come across an article that basically said that if a significant trade war erupts, it would be countries like Malaysia and Singapore that would experience the most significant impact. And I believe it because our economy is very open and very dependent on trade as we do not have a significant internal economy. The US and China are our most significant trading partners. If their economies are hurt, we will feel even more pain.

This, I believe, is unfortunately our situation, until the present quarrel between the 2 largest economies in the world is resolved.

This, I believe, is the most significant factor affecting investors vis-a-vis Malaysia. And there is nothing we can do about it.

Which is why I believe that NOW is the best time to lay bare all the bad news that are being uncovered. You are going to suffer anyway. You might as well get the bad news over with.

Secondly, I believe that investors, when faced with a changing situation, wants to reach the bottom as soon as possible. Everyone knows that the country is facing financial issues due to corruption. What they do not know is the degree. It will be a mistake to feed the investing public small doses of bad news over time, because they will not have a sense of the bottom.

Thirdly, from a political point of view, now is the time to pile up the bad news on Najib. At some point in the future the public will be desensitised because they want to move forward. In the meantime some very significant policy changes are going to be made. The public must understand and support these policy changes and the best way to get that is confirmation after confirmation that their worst fears of what went on inside Najib’s administration is well-founded. PH must build a strong momentum to get the public on their side with regard to policy changes and institutional reform. The public must understand that this is necessary to avoid that in future.

I think the PH government is doing this right. And I wish them all the best.

In due course, when the bottom of bad news is reached, and the US-China trade war is resolved and stabilised, investors will reassess Malaysia’s potential. I’m sure that their assessment will be positive.

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