There are the usual caveats. Bookkeepers must know how to add and subtract, and the accountants are expected to use an accepted system which allows the determination of a profit, if and when it occurs. There is risk that management will siphon off profits, or commit fraud when transacting corporate business.

It is therefore deflating to learn that in Malaysia the bookkeepers are incompetent, requiring retraining before business may proceed. Doubt arises about the entire balance sheet. A fundamental condition for successful enterprise is absent. Accounting methods designed to accurately indicate net efficiency of large enterprises is an invention of the capitalist system, and there may be reluctance to introduce them based on current political reasoning.

An investor trusts corporate officers as fellow shareholders to provide adequate dividends from earnings. Lacking distribution, they are expected to reinvest profits redounding to overall benefit, preserving equity. These are normal business risks, assumed by investors confident that corporate affairs will be made known to shareholders, even when full disclosure to the investing public is absent.

Malaysia has a peculiar situation. Politicians are businessmen/ shareholders, and their governmental duties conflict with personal interests. This is apparent in the duplicitous management of public money. The Prime Minister's Department manages utilities and oil resources. The Finance Minister serves as treasurer of the governing party. The temptations to mingle assets are many and great.

The management of public enterprises controlled by the government (in the interests of the public) resides with management chosen for compliance, not demonstrated executive ability. A directorship is often a sinecure to relatives of politicians, designed to ensure delivery of promised political patronage and as continuing reward for past favours.

Thus competent managers are compromised, forced accomplices to multifarious entanglements in order to survive, and thus further the political agenda of the government. There is paranoia associated with a telephone call from the politician/businessman.

The inability to separate corporate/public interests from personal interests of government ministers represents a significant burden. This burden takes many forms, but all result in a reduction of bonuses to management executives. There is resentment, and a sense of resignation erodes motivation.

When the price-to-earnings ratio of a listed company rises beyond 10-to-one, chances for successful investment experience are reduced. Above 20, rational expectation of increased earnings justifies the optimism.

In Malaysia many corporations have no earnings, and no realistic prospects. Many corporations have debt which cannot reasonably be paid back in the lifetime of living men. How does one explain P/E ratios of 40-to-one?

Malaysia has excess non-performing-loans, unusual in a country with artificially low interest rates. Risk of capital loss in corporate shares is limited to the value of the shares at the time of purchase. Shares purchased with borrowed money are often placed with the lending bank as collateral. If these purchase/borrowings are done in a forward time frame a pyramid is created which becomes implosive in a falling-domino manner when markets decline.

So far, so good. As long as share price is higher than borrowings, the shareholder is not bothered by the bank, other than for small interest payments due from time to time. Should share prices fall the bank develops loan concern, and asks for additional collateral.

If additional security is forthcoming the bank is reassured, and all continues without ruffle. However, if new assets are not pledged, the shares are then offered to the market, to which the market often reacts negatively. The paranoia of the ringing telephone increases.

In an atmosphere of excessive exuberance, generated by expectations of risk-free profit, an investor makes large borrowings, guaranteed by relative or friend, and with loan proceeds, purchases stock. Should events turn averse, pressure mounts on the borrower, the relatives and the friends. Added time is called for, and the loans are extended, often under political pressure.

This practice defers the day of judgement, allowing the banks time to merge and recapitalise, and often the loans are written off before the creditors are forced into bankruptcy. This explains much that is happening in Malaysia today. Because brokerage houses are also lenders, there is a serious need to consolidate them, and for the same reasons.

Malaysia exhibits exuberance based on multiple factors. The exaltation of power is a source of aphrodisia, along with pride of de facto ownership in major portions of the nation's wealth. A sense of omniscience and omnipotence accompany the psychosis; coupled with immunity from prosecution, any possibility for contact with reality vanishes. The idealistic political leader thus becomes the rich orang gila.

The successful businessman/politician is fond of giving advice (he abhors receiving it). Malaysian politicians assert dominant behaviour. Their arrogance is noticed by the investing public. When felonies go unindicted, a sense of lawlessness pervades the country, increasing risks to capital.

Only the bold and insouciant venture to increase exposure in this atmosphere; a defensive posture is understandable. A market supported by exuberance rather than a sober assessment based on assets (and returns) is vulnerable to sober analysis and re-evaluation.

Malaysia has allowed politicians/businessmen latitude in the past decade, and now it appears that the chickens return to roost. The roost displays overcrowding.

Markets artificially supported, by artifice or bombast, are levitated by expectation that "a bigger fool" is inevitable. In Malaysia the foreign investor, the Morgan Stanley Index, plays this role. An arrival delay portends transfer of liability to an unwitting public, prices buoyed by assurances of politician/businessmen acting as market shills.

As example, Petronas, the national oil company bought a shipping line. It also has a large interest in Proton, the national automobile plant. The investment has substantial loss. It qualifies as another bailout using public funds.

Testimony in a conspiracy trial alleged the prime minister personally telephoned to derail a corruption investigation in his department. He previously denied making calls to Petronas, intervening in a contract where his son was a principal. Executives of Petronas have not yet been subpoenaed.

Absent a bigger fool, Malaysia's public functions as unwilling substitute. When managers of publicly-owned corporations, local banks, and funds find courage to resist political intimidation Malaysia could again be an attractive low-risk investing environment.