$56 Billion "Subsidy" : A Personal Comparison with KLCI

To justify its fuel hike, we've been hearing from the government in many places especially the Mass Media that the "subsidy" is $56 billion.

For example, this "factbox" by the Straits Times repeated the $56 Billion figure, when comparing Malaysia against other nations. http://www.straitstimes.com/Latest%2BNews/Asia/BgSty_244353_1.html

It is not my intention to list out exhaustively every single mass media source that quotes the $56 Billion figure. Even my previous article has links that mentioned that as well.

It's been mentioned so many times in the Mass Media, and yet Not Questioned, that perhaps some of us has gotten used to it.

We become desensitized to it, because No One questions it.

It just become another number.

So, let me put it in another perspective.

I have used this comparison in the chatbox, and when I did that, some were surprised by how large the number is.

As investors and traders, the KLCI (KL Composite Index) is an Index that we monitor daily and for some throughout the trading day.

The KLCI is an index that comprises of the Top 100 Companies listed in Bursa.

These include names like Sime Darby, IOI Corp, Public Bank, Maybank, HL Bank, Tenaga Nasional, Telekom Malaysia, Genting, Petdag, Petgas, KLK, Digi, Bursa, MAS, Airasia, Astro, BAT, BJ Toto, Gamuda, Maybulk, Kencana, etc. etc. etc.

The List is 100 names long. Yes, ONE HUNDRED. Not 5. Not 10. Not 20. But 100.

If you are using your fingers to count, you need to count it 10 times, since 100 = 10 x 10 and I'm assuming you are a normal person with 10 fingers.

Yesterday, I indicated that the total Market Capitalization for the KLCI is approximately $650 Billion.

Remember that the KLCI includes companies owned by our Country's Richest. Robert Kuok, Ananda K, IOICorp's Lee, Public Bank's Teh Hong Piau, Quek Leng Chan, YTL's Yeoh, Syed Mokhtar, Vincent Tan, Mahathir's son, etc. etc. etc.

The KLCI traded at a P/E of approximately 12 (at around 1260).

This indicate that the Total Net Earnings of all the entire KLCI components - i.e the Sum of All Top 100 Companies listed in Bursa - is equal to : $650 / 12 = $54 Billion per annum.

Err ... What??

Only $54 Billion?

The Top 100 Company listed in Malaysia has a total Net Earnings of less than the $56 Billion per annum subsidy figure?

Is Seng on drugs?

And the government wants to take ALL that away?

And in my previous article, "generously" gives back $5.6 Billion as Rebates. And as the government announces more "benefits", the amounts become smaller and smaller and soon, becomes smaller than $0.1 Billion?

Will they ever add up to close to $56 Billion?

And I don't see our mass media reporting that Rakyat has requested and demanded more Rebates and better Benefits than the paltry $625 for those who owns an "eligible" car.

And I don't see our mass media demanding our Ministers to also do something for those who don't own "eligible" cars / motorcycles, but will surely be very badly affected by the rising prices of goods and services that is certain to happen.

Have we really become desensitized to the size of the figures involved?

Think about how much the government is taking away.

Think about how much they are giving it back.

I am not telling you what to do. I am merely giving you the facts about the total yearly earnings of the Top 100 companies in Malaysia.

I am merely comparing that number with the $56 Billon reported.