Foreign investors has not been having a great time in Malaysia in the recent months. The slide of the Malaysian Ringgit, 1MDB, the fear of GST, the list of negative news in Malaysia goes on and on.
The Kuala Lumpur Composite Index is relative flat since last year and the Ringgit has weaken almost 15% to the US Dollar since the end of August last year. Moreover, the fear that the implementation of Goods and Service Tax (GST) might really dampen economic activities in the country for the next few years is still very real.
Should investors be avoiding the Malaysian stock market or be betting heavy for the possible turnaround?
I would like to show you, through my short article here, that the answer to this very question is, “It doesn’t matter.”
Five Words: Dutch Lady Milk Industries Bhd
Dutch Lady Milk Industries Bhd (KLSE: DLADY) is one of the few consumer companies that was listed on Bursa Malaysia since 1992. Since 1992, Malaysia has seen the Asian financial crisis, the dot com bust, multiple anti-government protests and a global financial crisis. Yet, if you have invested in the company since 1992, you would have seen a total return of almost 9600% with dividend reinvested. This mean that a RM 1,000 invested in the company in 1992 would be worth about RM 96,000 today. More importantly, everything you get your dividend check now, it is worth 200% of your initial cost.
What does this example show? It shows two main things.
Investing shows its magic only after a long period of time, the problem is most people do not have the patience and temperament to stay for the long term.
Timing the market is useless, if an investor was to time the market when buying and selling this company, he would have sold out long ago and never been able to buy the company back at any affordable price.
Value In Action
So is the Ringgit finally turning around? Will GST impact the economy? I do not know and frankly I do not really care, and maybe you shouldn’t too.
Submit your email address for important market updates and FREE case studies!
[contact-form-7 404 "Not Found"]
We will only provide you with information relevant to value investing. You can unsubscribe at any time. Your contact details will be safeguarded
The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Stanley Lim’s personal capacity and do not in any way represent those of his employer and other related entities. Stanley Lim does not own any companies mentioned.