Fear is only natural. But when there is a stampede for the door, the right course of action is to urge for calm and assure that the door will not be shut. Already, fear of trading suspension is exacerbating selling.
This is why The Edge disagrees with calls for the government to immediately suspend trading on Bursa Malaysia.
Yes, there will be selling — knee-jerk or otherwise — but the market also needs to be open for longer-term investors who have the staying power to buy and wait for the market uptick.
There are already circuit breakers to allow investors time to digest the situation. This mechanism can be enhanced, should the situation warrant it.
But the message that Bursa Malaysia remains open for business must ring loud and clear for all investors, who have the right to access their own assets, cash or shares.
Investors who are in the stock market should know that prices can go up and down. Those who cannot take the losses should not have been in there the first place. This may well be an expensive lesson, but all is not lost if one learns from the experience.
There is good reason none of the mature markets have shut their doors, despite even steeper losses, and Malaysia would do well to follow that example.
Shutting the door now will only see the rush for the door when it reopens – and by then, those rushing out will not just be the ones who want to leave now but also those who would have stayed.
The Philippines Stock Exchange (PSE) Index plunged 24% when trading resumed today after a two-day shutdown following steep losses. Obviously the shutdown did not achieve the intended calm.