MCA President Wee Ka Siong is at it again! Yesterday he uploaded a video insisting EPF had made RM500 million of losses in MAHB shares trading despite EPF’s statement denying any purported loss in the transaction.
Wee Ka Siong also offered to gift me a mirror for self reflection. I thank Wee Ka Siong for the gift but I think he should keep the mirror for himself as he needs it more than I do.
Wee Ka Siong’s latest response to the RM500 Million EPF Scandal is getting more and more ridiculous as he does not understand a long position in stock. He is confused between a long position and long term position in stocks. As I have said in parliament that EPF did not short sell MAHB stocks. EPF took a long position in MAHB stocks which is to buy and own MAHB stock hoping the price rise further in future and close the position by selling it.
EPF took a long position in MAHB shares by buying them at RM2.50 and selling them off at RM6 per share making a RM3.50 profit per share. A year later, EPF was offered the chance to take MAHB private together with Khazanah Nasional, Abu Dhabi Investment Authority (ADIA) and BlackRock’s Global Infrastructure Partners (GIP) under GDA consortium.
Based on independent valuation of Hong Leong Investment Bank of RM12.61 and RM13.71 per MAHB share EPF decided to make the offer at RM11 as it is a sound investment. EPF has never short sell and took a short position in MAHB stocks, therefore it is absurd for Wee Ka Siong to say that when EPF sold MAHB shares at RM6 and later bought them back at RM11, EPF made a RM5 per share loss!
I have given a simple pencil analogy in parliament. Ali bought a pencil at RM1 and sold it at RM2, later Ali bought back the same pencil at RM5 and sold it at RM6. What is the profit that Ali made? RM2. But based on Wee Ka Siong’s argument, Ali had made a loss of RM3 by selling the pencil at RM2 and buying it back at RM5. This pencil analogy could be easily understood by a primary school student but not Wee Ka Siong.
Wee Ka Siong also made another blunder when he said since MAHB will be delisted, the RM11 will be the final share price of MAHB as the share price cannot increase further. Wee Ka Siong cannot be more wrong, although MAHB is delisted, the value of the company will grow as long as its earnings continue to grow pushing the company share price further.
Although MAHB is delisted, EPF can exit the investment either by selling MAHB shares through a private equity sale or relist it on Bursa and selling it through stock exchange in the future. Just like when Maxis was taken private in 2007 its market capitalisation stood at RM39 Billion and was relist on Bursa two years later with a valuation of RM40 Billion.
I do not intend to give Wee Ka Siong a public lecture on finance and basic stock market trading however his ridiculous reply ought to be corrected so that the public would not be confused. I advise Wee Ka Siong to get professional advise on basic stock market trading before issuing further response to avoid being a laughing stock.
Even when there is no MCA leaders who understand investing 101, surely there must be a MCA member out of the one Million MCA members who can understand simple investment that could advise Wee Ka Siong on his self create RM500 Million EPF Scandal.
Chong Zhemin
MP for Kampar
