The risk would possible faced by some industries or companies in malaysia after the 14th general election was reputation risk. Reputation risk is a risk of loss that results from damages of a company’s reputation which may cause lost of revenue or destruction in shareholders value. Reputation risk are normally perceived by external stakeholders, damages of a company’s reputation may caused by product recall, poor product or poor service quality which result in change of attitude and expectation of stakeholders towards company.
YTL Corporation Berhad is a well known integrated infrastructure development company which involved in construction contracting, cement manufacturing, property development and investment and so on. It also have broad operations around the world including Malaysia, the United Kingdom, Japan and more. In the High Speed Rail project which would link two capital city of Malaysia and Singapore upon completion, YTL Corporation Berhad successfully binding the HSR project in joint venture with TH Properties Sdn Bhd which formed a formidable consortium against many companies.
As a result from successfully winning the HSR Project, YTL Corporation Bhd share price had increased by more than 9% after the announcement of the news, closing at RM1.43 as per 7th April of 2018. YTL are likely to gain large profits and growth in company’s value from the HSR project. YTL had gain positive reputation over the HSR Project as external stakeholders are interested and expect to gain value from investment in YTL.
As Pakatan Harapan won 14th general elections, forming new government and administration of Malaysia. Uncertainties arise to mega project that approved by previous administration of the possibilities to carry out the project under the ruling of new administration. Negative impact and expectation from external stakeholders can be clearly seen as continuously dropping in YTL share price from 8th of May to 18th of May, from RM1.33 to RM0.99. Expectation of shareholders to gain value from investment in YTL are tattered, change in shareholders behaviour towards YTL can be seen from urgently sell off shares of YTL, contributing to the tremendously drop of share prices.
In a nutshell, YTL Corporation had experienced negative impact such as change in behaviour and expectations of stakeholders causing the up and down of share price within a short period As the YTL Corporation was relatively stable and have good fundamentals as construction stock, the tremendously drop in share prices was claimed to be a knee jerk reaction to the new government. The situation was unpredictable and unmanageable by YTL and nothing could be done to prevent and control, it was advisable for YTL to remain day-to-day operation as normal, as fundamentals will prevail over time.