Khazanah board's resignation not expected to impact local stock market

KUALA LUMPUR: The resignation of the entire board members of Khazanah Nasional Bhd is not likely to have any impact on the local equity market as Bursa Malaysia is mainly influenced by regional bourses, said Hermana Capital Bhd chief executive officer and chief investment officer Datuk Dr Nazri Khan Adam Khan.
"In fact, the effect is relatively muted. So far, we do not see any big fluctuation in stock prices related to companies Khazanah has invested in, which include CIMB Bank Bhd and Axiata Group Bhd," he told Bernama.
Nazri Khan said reports that Khazanah, Permodalan Nasional Bhd and Petronas would likely come under the ambit of the Prime Minister's Office instead of the newly formed Ministry of Economic Affairs would not hamper investors' confidence in Malaysia.
"It is just a restructuring move and a baby step to improve the governance and feasibility of the three companies under the New Economic Model.
"Furthermore, it is also one of the ways to phase out political appointees in the government-linked companies (GLCs) as expounded by Prime Minister Tun Dr Mahathir Mohamad," he said.
Commenting on Inter-Pacific Securities Sdn Bhd's statistics that foreign net outflow on Bursa Malaysia amounted to RM437.1 million from Monday to Thursday compared with foreign net selling of RM247.1 million a week earlier, Nazri Khan said it was mainly due to losses in oil and gas-related stocks affected largely by tensions between Yemen and Saudi Arabia.
Meanwhile, Assistant Professor of Management at Asia School of Business Dr Renato Lima de Oliveira said a series of resignations and changes in the GLCs would give greater leeway to the new government to pursue their policy priorities and manifesto.
"There is a lot of goodwill with the current government, with Malaysia's historical alternation of power, and Pakatan Harapan (PH) will have the ability to put together their governing team. Many can see these changes as part of a unique historical moment.
"However, it is important to stress that one of the key points of PH ascension to power was to strengthen the country's institutions.
"It is important in the long run to strengthen the governance of GLCs and protect them from political changes and pressures," said de Oliveira, who is also a fellow at the Institute for Democracy and Economic Affairs.
However, if the government were to shift the vision of how the GLCs should function, which is a complex issue, he said it needed to draft a vision and engage the society via public hearings, forums or parliamentary debate.
From the feedback gathered, it must hire the right people to tackle the tasks at hand, he added.
"Ideally, recruit (the right people) through a system such as an independent search committee that ensures positions are filled by merit," he said.
De Oliveira said as Malaysia is getting closer towards having competitive elections involving changing the government, it would not be helpful to have key state positions changing hands every time there was a change of government.
He noted that the GLCs should be protected from political changes and pressures to enable them to become more focused in executing the policy priorities of the government in power.
On Friday, Mahathir said the resignation of Khazanah managing director Tan Sri Azman Mokhtar and the rest of the board members would enable the government to restructure the sovereign wealth fund accordingly.
Their resignation would "clear the deck to allow the government to restructure it" in line with policies of the new administration, he said, adding that the government was not on a witch-hunt.