Fusion Investor Chatbox

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Thursday, June 19, 2008

SAPP Sap Sui?

Since SAPP publicly announced the "bombshell" at 2 PM today, there was a lot of discussion in my chatbox on this topic. The first session during trading hours was more "speculative" since there wasn't much newsflow then. The second session in the evening appears more measured as everyone tried to digest the newsflow. It is good to see the regulars chipped in to share opinions, data and links. Whilst we tried to stick to known data as much as possible, inevitably, opinions/known rumours are included and it is hard to separate the two.

To save time, rather than write a new piece from scratch, I will just copy and paste the bits that I find interesting with minor editing for better readability, including the links for future reference.

As you read below, keep in mind what might likely transpires over the near term on the political front. The first area is is obviously the VONC (Vote of No Confidence) and the various party positions. As expected, BN component parties - MCA, MIC has publicly supported AAB (i.e. reject VONC) which I believe is what the market expects also. Similarly, PKR, DAP has publicly supported VONC and I believe the market expects this also. Other parties (such as UMNO, Gerakan, PAS, etc.) have yet to issue public statements at the time I write this, and personally, I don't expect surprises to be announced. I believe markets will look closely at how UMNO - the main party - votes. I think UMNO, despite their internal squabbles - will unite and reject VONC to protect their personal interests in Government and Parliament (despite numerous individual wishes otherwise).

The second is to look for clues as to how AAB intend to deal with this "dissent" from SAPP party. A couple of chatters opined earlier that AAB has no choice but to expel SAPP, as a matter of BN discipline, to deter future "dissent". After editing below, my own opinion is that the bulk of the damage to the BN party has already been done when Yong decided to publicly announce VONC. As to whether SAPP stays, voluntarily leave or is expelled, future market reactions will depend on how much political instability is generated. Much depends on AAB and BN, since if BN MPs are not united on the VONC, then, they risk losing everything (e.g. the government, their MP position within Parliament, etc.) and from their perspective, it should be a matter of rationally weighing conflicting priorities. Emotional knee-jerk reactions are more likely to be harmful to the nation in the long run.

If you are in cash, is this crisis an opportunity to buy shares on the cheap, or wait? If you are currently holding shares, should you sell tomorrow or wait for a while until this crisis ease?

My own opinion is that if you are an investor who don't watch prices all the time, then, you should wait and stay in cash (or just buy a small fraction if you cannot resist). The KLCI closed 1212.59, and even though this looks attractive compared to last year's peak, I think the odds are very good that we will see even lower prices before this coming August to October period.

However, if you think you have the ability to time the market i.e. go in at lower prices and sell at higher prices, then, perhaps you don't really need to ask me and perhaps it is me who needs to ask you (smile).

Happy Monitoring!


Extracts from the Chatbox:

Seng (20:13) : A short update from Channel 7 (evening news) on TV (this is based on my take from memory & can be wrong. I did not take notes, and am recalling from memory what I saw).

Seng: As expected, MCA and MIC publicly announced their support for AAB and against the Vote of No Confidence (VONC). It seems their members have been instructed to vote for AAB. I didn't catch the bit whether UMNO will unilaterally vote for AAB, but if MCA and MIC votes for AAB, then, I lean towards the view that UMNO will be behind AAB on the VONC. After all, within UMNO, AAB has already said that he will hand over orderly to Najib, and this matter could also be viewed as within UMNO, and not something outside UMNO like the VONC.

Seng: PKR via Khalid's statement also - as expected - will support the VONC. However I noticed that during his speech, there are many parts that he hesitated and it wasn't a continuous, free flowing response. Perhaps he is less well versed, or perhaps he's trying to find the right words.

Seng: DAP - via LGE - expressed surprise by SAPP's move. He repeated that SAPP is only a 2 MP party, and it's not as if BN will fall as a result of this move. But he says anyone is welcome to join PR. Channel 7 only showed a snippet, so, I don't know if LGE called other Sabah MP to also join in the VONC. Naturally, like PKR he says DAP supports the VONC.

Seng: So, from what I gather, it seems broadly consistent with what we discussed today, which is that the VONC is likely to be voted down, unless more MPs from BN cross over. The impression from Channel 7 is that (the latter) probably won't happen since MCA and MIC stands solidly behind AAB in Channel 7.

Seng: Also, the Parliament Speaker reiterates that he has the right to accept or reject the VONC. He reiterates the 14 day notice, but mentioned that he hasn't received "instructions" (?) or feedback from anybody on the SAPP's VONC plans.

Seng: Lim Kit Siang (LKS) in his blog thinks that it is unlikely VONC can be tabled next Monday - his response is "I see little possibility of SAPP’s No Confidence Motion against Abdullah as Prime Minister being tabled and debated on Monday unless there is a second political tsunami in the next few days, with waves of support from other Barisan Nasional MPs from Sabah, Sarawak and Peninsula Malaysia making it a credible parliamentary move"

Seng: So, it seems now it depends on the remaining MPs that sits on the fence over the next few days, whether they will publicly announce their support or otherwise for the VONC.

Seng: Also, my impression from hearing SAPP President's talk just now on TV is that his gripe seems focussed on AAB than BN party. He refers to Abdullah's administration rather than Barisan Nasional. This capitalizes on the wave of dissent within UMNO against Abdullah personally, rather than BN. It's a gamble. If AAB and BN retains power it will be a dilemma for AAB whether to expel SAPP or not. By phrasing it as a VONC against Abdullah personally, AAB must bear in mind that if he expels SAPP, it could be seen as a personal revenge as well as further weakening BN. So far, none of MCA and MIC has called for SAPP to be expelled. Perhaps if BN position is stronger and perhaps if they get more arrogant, then, (I think) they might consider expel. At the moment, BN's position is tenuous, and I believe they clearly realize the position they are in.

Seng: Also, PKR Khalid repeated his offer to vacate his seat to DSAI.

Seng: RPK's take should put a smile on your face - "0.1% chance Pak Lah can stay on as PM beyond Christmas; There is a strong possibility that the next Parliament session will commence with a vote of no confidence against Prime Minister Abdullah Ahmad Badawi and there is also a strong possibility he may be out of office as early as next week." - http://www.malaysia-today.net/2008/content/view/8964/1/

Seng (20:42) : This together with Channel 7 confirms my impression that SAPP is not against BN, but Abdullah's leadership. He has put it squarely on Abdullah. - http://www.malaysia-today.net/2008/content/view/8957/84/ - "SAPP president Datuk Yong Teck Lee said the party is not pulling out from the Barisan Nasional but has called for Prime Minister Datuk Seri Abdullah Ahmad Badawi to step dowe because they do not have confidence in his leadership. Yong said the party would make its stand known in Parliament on June 23."

Seng: So, the million $ question is what should we take from all this? Is this the start of more worse things to happen? Or is this a temporary crisis that presents temporary opportunity before the next crisis? Comments invited.

Seng: Here is MCA official stand on the SAPP VONC - http://www.mca.org.my/English/Commentaries/Pages/MCAstandsbythePrimeMinister.aspx; "MCA will stand steadfastly with the Prime Minister of Malaysia, YB Dato’ Seri Abdullah Ahmad Badawi and the BN coalition ..." - this one is supporting BOTH AAB and BN.

Seng: MIC official website is hopelessly out of date - their latest news is dated 3 March 2008. LOL! - http://www.mic.org.my/MIC/Home.aspx

Seng (21:26): Mohd Kamal Abdullah frequently writes in Malaysiakini, MalaysiaToday and in the FORUM column of MALAYSIA CHAT www.malaysia-chat.com. - here is his take on this issue on (17 June) - http://kamal-talksmalaysia.blogspot.com/2008/06/sapp-vote-of-no-confidence-on-prime.html; "Its been reported that many BN UMNOputras top leaders are in Kota Kinabalu trying to convince Datuk Yong from weakening the BN. The leaders were PM Datuk Seri Abdullah Ahmad Badawi yesterday while Tengku Adnan, Tan Sri Muhd Mohammad Taib and even Khairy Jamaluddin are in Sabah.; ... "If PM Datuk Seri Abdullah announces that BN will set-up a Royal Commission of Inquiry on the Sabah illegal immigrant issue, then the issue of defection or leaving the BN will 'temporarily' be called-off. Its now in the hands of the BN leaders or PM Datuk Seri Abdullah himself."; So, if he is to be believed, maybe all it takes is for AAB to agree to an RCI, and the VONC might not materialize ... (or maybe not, since VONC needs 14 days to be tabled in)
Seng: ... found this poll (in SAPP website) which was mentioned in Channel 7 which I just remembered - http://sapphq.blogspot.com/ - 86% of online voters vote that SAPP should leave BN and join PR!

starter: From AAB : he had not been able to satisfy Yong’s "personal greed". Actually Yong has been upset with Abdullah since before the general election when his request to contest the Kota Kinabalu parliamentary seat was turned down by the BN leadership.

starter: Sabah party divided on opposing PM http://themalaysianinsider.com/index.php/home/42-lead-stories/651-sabah-party-divided-on-opposing-pm

starter: SAPP chief: Some MPs may go independent http://themalaysianinsider.com/index.php/home/42-lead-stories/652-sapp-chief-some-mps-may-go-independent

starter: Huge blow to Abdullah's leadership http://themalaysianinsider.com/index.php/home/42-lead-stories/643-huge-blow-to-abdullahs-leadership

starter: Now we have some personal reasons why Yong is not happy with AAB. He wasn't choosen for the KK seat during the last election.

Seng: It seems DAP was not consulted when SAPP made the announcement today. Two reasons. 1. LGE expressed surprise in Channel 7, as I mentioned below. 2. LKS's blog also queried the June 23 date, since "The Parliamentary Standing Orders not have special provision for VONC". E.g. Standing Order #27 says must give 14 day notice, i.e. July 2 is first available date. Standing Order #18 has deficiency since only allow 1 hour debate. etc. A respected commentator there "Jeffrey" thinks that DAP was NOT consulted about SAPP's VONC plans, suggesting that it is rather poorly planned, if it was planned with PR in the first place.

starter (21:55) : Seng, I don't think its planned with PR in the first place. DSAI might know about it ,Ku Li definitely knows about it as he is the first one to break out the news about a defection from a BN compunent party.

starter: Now lets see why Sapp must resort to this actions.... By announcing their plan to table a motion of no confidence, Datuk Yong Teck Lee and the SAPP have already achieved what they set out to do - embarrass and humiliate Abdullah. The message that Yong wants to send to the rest of Malaysia is that the PM is weak and he should be replaced as the head of Barisan Nasional

starter: In recent days, Yong has told BN colleagues that he was leaning towards making SAPP an independent political party. He believed that there was a good chance of BN and Umno being defeated in the next general elections and felt that it was a good strategy to fight for the interest of Sabahans first and decide later which coalition to join.

Seng: starter, 21:55 - I agree with you. I find it ironic that DAP didn't know, DSAI knows, Ku Li (within UMNO) knows i.e. BN knows but PR (except DSAI) doesn't know.

starter: I think Yong threatened AAB about this defection when they met last time. A time frame of until August was set and some of Yong request includes appointing him as a senator and eventually a cabinet post.

starter (22:02) : Apparently AAB called for a BN supreme council meeting on Thursday to evaluate on Yong's demands . Hmmm ? Thursday ?

starter (22:06): BN officials believe that the motion of no-confidence gambit was planted in Yong’s mind by Anwar and are prepared for a flurry of surprises from the former deputy prime minister over the next few days. They believe this will be Anwar’s best opportunity to build some momentum and make good his boast of being able to force the crossover of more than 30 BN MPs to Pakatan Rakyat.

Seng: starter, 22:02 "The PM has called for a Barisan Nasional supreme council meeting on Thursday when he is likely to detail some of Yong’s demands to him, including an appointment as a senator followed by a position in the Cabinet." - I think the article might be referring to tomorrow, Thursday, 19 June, due to the phrase "when he is likely to ...".

Seng: starter, 22:06 ... I think the Malaysian Insider article indicates the writer's opinion since he refers to "BN officials believe". I wonder who are these "BN officials". Also, in other parts of the same article, the author wrote "It is understood ..." ... Anyway, it is a natural suspicion since it is my opinion that Non-BN people also suspect the same thing, since DSAI met him twice apparently.

starter: yeah Seng,you are right about the date,the supreme council meeting is schedule for tomorrow. But why Yong outburst today when his request has not been deliberated yet?

starter: But note this...Abdullah hit back last night saying that he had not been able to satisfy Yong’s "personal greed". I think Yong got the signal yesterday night.

Seng: Also, there is a possibility that PAS wasn't consulted either, making it both PAS and DAP. And judging from PKR Khalid's talk this evening in Channel 7, not sure if he knows too ... maybe only DSAI knows ? Hmmnn ...

starter: I think this outburst caught everyone by surprise except AAB. DSAI might be hoping for something like this to occur but I don't think he expected it also but then Yong has met DSAI twice,in KL and HK,so anything is possible.

Seng: "Abdullah hit back last night saying that he had not been able to satisfy Yong’s "personal greed". " - According to the writer, it seems that way isn't it? I wonder who the writer in Malaysian Insider is, since for him to write this, he must have heard it from someone close to AAB I suspect. Isn't this considered a rumour piece?

Seng: The Malaysian Insider articles (3) provides interesting insights into possible motivations for Yong to do what he did. I'm curious why Malaysian insider is so keen to provide these possible motivations ...

Seng: Kamal - in my 21:26 - who writes for Malaysiakini - seems to have a different take than Malaysian insider ...

starter: I think AAB might have told some of the BN supreme council members about this and also his discussion with Yong and his personal request. Leakages might be from some of the ppl assisting some of the supreme council members in their daily events. Just speculating here.

Seng: Yeah, possible. In the past, I noticed Malaysian Insider seems to lean towards BN views too, although just a general feeling now. They may be closer to BN and so, have these 2nd hand feedbacks from people in the know. Possible ...

Seng: You see, according to Kamal, Yong was in discussion with AAB, Tengku Adnan, Mohd Taib and Khairy when they were in Sabah ...

starter: I think during the latest visit to Sabah by AAB, only Yong didn't turn up and it was reported in the main stream media. The friction is there already

Seng: So, maybe the 5 of them were in discussion first, then, in the latest visit, Yong isn't there? Or vice versa? What do you make of Kamal's piece?

bullbear: Anwar has been feeding the rumour mill of BN MPs crossing over to PR. If this occurs, it will be unlikely to be from MPs in Peninsular Malaysia. If there is, it is very likely (with due respect to Sabah and Sarawak) to be from the smaller coalition partners of BN in Sabah and Sarawak. http://drchua9.blogspot.com/

bullbear: Presiden SAPP, Datuk Yong Teck Lee berkata parti itu tidak akan keluar pada masa ini dari BN yang dipimpin oleh Abdullah, tetapi statusnya akan disemak pada hujung minggu ini. http://www.malaysiakini.com/news/84658

Seng: starter, note the date of Kamal's piece - he actually wrote that yesterday, so, he knew Yong is coming out today.

bullbear: seng, & starter: looks like Yong Teck Lee has some specific demands put to AAB for Sabah. These could not be met and he felt that this period is an opportunity for him to act. After this, the opportunity window will be closed.

Seng: bb, MCA already came out with official party statement saying they will support both AAB and BN - see my earlier posting at 21:09 from MCA website. Dr Chua's opinion is interesting, but I don't think he's in the loop.

starter: I think Yong was there during the first discussion and infact he met AAB personally at Putrajaya and conveyed some of his request with August as a dateline. AAB must have slept on it and that is why Yong is angry and didn't turn up during the latest meeting. Will read Kamal article again....

bullbear: seng, chua soi leck's reasoning was what i wanted to alert our readers to.

bullbear (22:36) : anyway, SAPP may yet leave the BN... this is left open for the moment to be decided on Friday

starter: Seng, is it possible he key in the date wrongly? haha!! yeah ! you're right,he knew it yesterday,damn !!

Seng: bb, your 22:36, SAPP official stand is that it is AAB problem, not BN problem. They still want to stay in BN. Yong just don't have confidence with AAB personally. SAPP has put the blame squarely at AAB as a person, not the BN party. See my 20:42.

starter: So Seng,we can safely assume that the leakages happens yesterday night and as such the article in Malaysian Insider does have some truth to it ,right?

bullbear: ..SAPP is a small party... also Chinese based party.. just wondering why it should stick its neck out for the Sabah cause....?????

bullbear: "ada dalang disebelah batu"

newbie: it was very well planned by Anwar ... this will be the first step for check mate

bullbear: newbie.. it did cross my mind that it may be initiated by Anwar... but then why now?

newbie: BB, step by step more things will be unveal

Seng: starter, I really don't know the truth ... Malaysian Insider paints a picture that this could be a genuine personal problem between Yong and AAB which is perhaps more believable.

bullbear: which faction's purpose is better served when YTL proposed the VONC next week?? Is it for the benefit of AAB's opponents within UMNO? for PR? or just sandiwara (i.e.) no chance of success but just a threat...

Seng: And if the Malaysian Insider is right, then, UMNO will be solidly behind AAB, which means UMNO, MCA, MIC are solidly behind AAB. Which means the VONC is going to go down. But having said that, if the VONC happens July 2 (14 days notice period), then, anything can happen in the interim. Also, apparently, Thu, Fri and Sat is going to be interesting because there is going to be some specific developments like the UMNO supreme council meeting tomorrow ...

bullbear: Would AAB's opponents within UMNO be willing to risk a VONC in parliament given the uncertainties of maintaining control of the federal government?

Seng: bb, from what we know so far starting from my postings after Channel 7 piece, everything points pretty much to the VONC being shot down (I think all UMNO will support since MCA and MIC already support) if it happens today. Of course, this can't happen until July 2 earliest according to LKS due to Parliamentary Standing Orders requirement which it seems SAPP didn't know about.

bullbear: yes, why SAPP just withdraw from BN. Instead, proposing a VONC without a definite possibility of winning seems a feeble attempt at bringing SAPP's grievances into the open. Probably, SAPP has already decided to leave BN on own volition if this VONC cannot succeed for the present. Will AAB gives in to this threat? Remember the famous words, "Saya pantang di-cabar."

starter: Seng, lets look at things that we can confirm.... 1) Yong didn't contest in the KK seat he requested...anyone would be angry with this ,whatmore when he is the president of Sapp. So we have the motive, next we have two reporters stating the same reasons or condition that can prevent or postpone the defection.....Commission of Inquiry on the Sabah illegal immigrant issue and they knew about it last night ,so that means the source is quite reliable.

bullbear: He said the momentum for Sabah to recover autonomy, obtain 20% oil royalties instead of the present five per cent and the return of Labuan would be lost. http://thestar.com.my/news/story.asp?file=/2008/6/18/nation/20080618205211&sec=nation

Seng: bb, I think SAPP didn't want to withdraw from BN because Yong wants to make it very clear that his problem is with AAB as a person, and not BN the party. I don't know how this will play out over the next 2 weeks. IF VONC is shot down on say July 2, then, the next question is what to do with SAPP. I think AAB has a difficult choice since 1. Expel SAPP means it's personal rather than Party, and it's also a no no. 2. If SAPP is expelled and others follow suit and BN kaputs, then, AAB will be killed. It's not an easy choice, even though if he does nothing, he'll be seen as weak. With Yong presenting it as personal rather than party, it's a gambit.

Seng: starter, yes, Yong makes it clear it's personal. I agree.

bullbear: It is rather unfair in my opinion that Yong refers to AAB as the problem... surely the problem is with UMNO, the dominant party in BN.

Seng: bb, TDM (and others within UMNO) also makes it clear (that the problem is) AAB as a person, not the BN (or UMNO) party too

starter: Seng I think this motion of no-confidence might not happen at all because the the request if submitted today will only be heard on July2 under Standing Order #27 and I'm sure the speaker will reject it earlier just like previously when the PR submittted the request to debate on the Mahkota Cheras thingy.

Seng: Yes, this is what LKS is saying. That the earliest possible date is July 2. It can be done earlier under Standing Order #18, but this only allow 1 hour debate, which is meaningless.

Seng: Looks like the political uncertainty is going to be prolonged for at least 2 weeks at a more intense level than previously ... Today's volume was higher, suggesting real fear. Will be interesting to see if tomorrow's fear is higher or lower. I think most people won't analyse it in this detail, so, my guess is MORE FEAR tomorrow ...

starter: So I think next we have to wait for the BN whip...Najib to see whether he will expel Sapp or will they bow down to Yong's demand and set up a royal commission on illegal immigrants.(very unlikely)

Seng: starter, why do you mention that Najib will expel SAPP?

bullbear: http://malaysiana1.blogspot.com/2008/06/datuk-yong-teck-lee-his-demands.html

starter: Seng,he is I think the BN whip...I can't remember the term correctly but any action will be taken by him.

Seng: Ok. So, you're speculating UMNO will expel SAPP? Maybe you want to wait until after tomorrow's UMNO supreme council meeting first ...

starter: Yes Seng, we should know by tomorrow but I heard Bung from kinabatangan request BN to take stern actions on Sapp....TV3

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