Take a break. Look like something to consider in mind. Any expert here to make a summary? we all care for this land and the people here, are we not?
>From Asian Wall Street Journal 9th June 2000 As Rate Worries Begin to Wane,Investors Pull Out of Malaysia By LESLIE LOPEZ Staff Reporter of THE WALL STREET JOURNAL KUALA LUMPUR, Malaysia -- Malaysia's reinstatement in the Morgan Stanley Capital International indexes last week was supposed to pull foreign funds back into the Kuala Lumpur Stock Exchange. Instead, the KLSE has been battered, with its benchmark composite index falling 6% in a week. What's more, fund managers don't expect a reversal in sentiment anytime soon. So what happened to Malaysia's coming-out party? Blame it largely on investors' optimism that U.S interest rates won't rise as much as earlier anticipated. When fears of more U.S. interest-rate increases spread last month, the Kuala Lumpur market bucked the heavy selling that hammered other regional exchanges because some investors found comfort in Malaysia's currency controls and its closed current account. Now -- with U.S. rates expected to stay steady -- Han Ong, chief of Asian-Pacific equity strategy for Salomon Smith Barney, says Malaysia has been stripped of its safe-haven status and is suffering from a "complete 180 degree flip-flop in sentiment." Hong Kong-based Mr. Ong says, "With the interest-rate element out of the equation, other markets are looking attractive, and Malaysia [looks] pricey." 'Trends Are Changing' Malaysia's troubles aren't just a case of portfolio rebalancing by foreign fund managers, according to Mr. Ong and other investment analysts. A combination of domestic political jitters, continued concerns over the slow pace of corporate reform and the lack of attractively priced listed companies are forcing investors to reconsider their strategies here. "I see the market bobbing at these levels," says Edmund Cheah, chief executive officer of KL Mutual Fund, the country's biggest privately run fund-management group. "Investing trends are changing and the days of blanket investing into emerging markets are numbered. What we are going to see is more micro-investing in Malaysia." The KLSE composite index shed 13, or 1.5%, to 842.24 on Thursday. That's its lowest level in five months and extends a seven-day slide that that has erased most of this year's gains. The index hit a high of 1013.27 in mid-February, up 25% from its 1999 closing level of 812.33. The recent reversal has all but wiped out the fruits of that rally. It wasn't supposed to turn out this way. With the economy climbing out of its worst-ever recession in 1998, many investment analysts reasoned that foreign funds would have little choice but to move back into Malaysia once the country was reinstated in the Morgan Stanley Capital International indexes. (The MSCI indexes are closely tracked because they are used to gauge the performances of fund managers. Malaysia was dropped from the indexes in 1998 when it imposed capital controls, which have since been relaxed.) "Part of what we are seeing now is a consolidation after the pre-MSCI run-up. Valuations in Malaysia are too high relative to other regional markets," says Lim Kok Ann, managing director of institutional sales at BNP Prime Peregrine Securities in Singapore. Little Local Support Consider the country's largest banking group, Malayan Banking, or Maybank. Its shares are trading at a price-to-book ratio of 3.5 -- meaning their market capitalization is 3.5 times the declared amount of the bank's net assets. DBS, Singapore's largest bank, on the other hand, offers a much more attractive price-to-book ratio of 2.6. Another example of a comparatively high valuation, analysts say, is conglomerate Sime Darby, which is currently trading at its net asset value of 4.90 ringgit ($1.29) a share. In contrast, conglomerates in Hong Kong generally trade at a 30% discount to their net asset values. Some Malaysian analysts now grumble that they should have seen the sell-down by foreigners coming. They note that net portfolio inflows were starting to decrease since mid-April. In the five weeks since then, official data shows a net outflow of 1.34 billion ringgit. With foreign fund managers moving out of Malaysian stocks into less pricey regional markets, dealers say the Kuala Lumpur exchange is finding very little support from local funds, which bulked up with Malaysian stock ahead of the MSCI reinstatement. "Many local funds had soaked up stocks hoping that they could unload their shares on foreigners. Instead, they got ambushed," says a chief dealer with a bank-owned securities firm. At the same time, he notes, foreign hedge funds, which had come into the market before it rallied earlier this year, were selling their stock for a profit. Badly burned are Malaysia's retail investors, who are now facing margin calls. That, say analysts, will add to the selling pressure on the KLSE in coming days. Concerns over a rift between Prime Minister Mahathir Mohamad and Finance Minister Daim Zainuddin are also likely to worry local investors, at least in the short term. Write to Leslie Lopez at [EMAIL PROTECTED] http://interactive.wsj.com/ **************From Uncle Yap************** The Malaysian News & Discussion Group ===================================== Read or subscribe to this group at http://www.eGroups.com/list/beritamalaysia/ To subscribe by e-mail, send e-mail to [EMAIL PROTECTED] To unsubscribe by e-mail, send e-mail to [EMAIL PROTECTED] Just The Malaysian News ======================= To subscribe:just send blank e-mail to [EMAIL PROTECTED] To unsubscribe: [EMAIL PROTECTED] Once registered and subscribed, you will get the daily articles about Malaysia delivered to your e-mail box ------------------------------------------------------------------------ Accurate impartial advice on everything from laptops to table saws. http://click.egroups.com/1/4634/1/_/1812/_/960530790/ ------------------------------------------------------------------------
