Baby, I got the "fever" - and it's clouding my reporting!

The top of the front page of the New Straits Times on 25 Feb has a story saying that the KL composite index (KLCI) soared to 874.82 the day before, breaking through the 870-point barrier to reach the highest level in four years. The headline attributes the increase to election fever and “feel good” economic factors.

But what did the election fever have to do with it? NST tries to explain by offering the following quote:

“There were rumours that the date of the general election will be announced soon,” a dealer at a local brokerage said today. “This caused many players to place their positions in the market ahead of the actual announcement.”

And that was it. Even though the dealer offered merely a conjecture, it still hardly explains. Wasn’t there a rumour of the announcement of the election a day, two days, a week, even two weeks earlier?

And isn’t it not true that elections tend to create uncertainty—big or small—so that the
market, ever conservative in outlook, would hedge, if not acting bearish, rather than being bullish?

NST appeared more interested in getting hold of whatever to suggest that the positive performance of the KLCI reflected well on the BN government
so that, by extension, a BN victory at the upcoming election would only bring even more goodies to the country.

It would have been fine had all that come from an opinion piece. But it was from what was supposed to be a news report. For NST then, there was no election uncertainty because the paper had pretty much sewn up the election for BN.

Furthermore, yesterday (25 Feb) at the KL stock exchange, the index dropped by 2.79 points. NTV7 described the market as taking a “breather” and NST (26 Feb) said it “paused for a consolidation”.

Hmm, so yesterday’s drop had nothing to do with the election fever or uncertainties associated with the election, eh?

Conversely, because the day before (24 Feb) did not see the election date announced, common sense would say that yesterday would be even more feverish for people expecting the announcement, wouldn’t it? If the election fever explanation offered by NST for the KLCI “soaring” on 24 Feb should hold true, why should it not hold true for the day after? So why did the index dip then?

What’s more, yesterday also saw Bank Negara releasing a glowing report on the economy in the fourth quarter of 2003, giving an overall growth of 5.2 per cent for the year as opposed to the official prediction of 4.5 per cent. Again, shouldn’t this “red-hot recovery” (NST, 26 Feb) bring about a further “soaring” of the KLCI yesterday? What better “feel good” economic factors can you get?