|
|
Change Your Life! |
Frozen shares start to melt sinking market |
|
News |
July 4, 2000
KUALA
LUMPUR (AP) - Malaysian stocks sank quickly Monday when shares owned by
Singapore investors that were frozen for nearly two years under emergency
measures to cope with the Asian crisis started being put back on the
market.
The gradual release of the Malaysian shares, once traded over the counter in Singapore under the Central Limit Order Book, or CLOB, began with Monday's session and will be held daily over 13 months to prevent violent market ructions.
Thawing out the frozen shares has been viewed as a major step for Malaysia to restore investor confidence, rising again amid robust economic growth. But unease remained over the spectacle of shareholders unable to touch their assets since September 1998. "If I were a CLOB investor from Singapore, I would be selling like crazy," a Malaysian financial analyst told The Associated Press on customary condition of anonymity. "I wouldn't want to hang around waiting for Malaysia to spring more nasty surprises on me."
The Composite Index was down 3.1 percent before midday to 807.97 in thin trading that dealers told Dow Jones Newswires was due to negative sentiment over the CLOB. Trading volume was thin, with most investors staying on the sidelines to see the effects of the first day.
Among stocks with CLOB exposure, Public Bank's foreign shares were down 4.7 percent in the early hours of trading. Plantation conglomerate Sime Darby fell 4.1 percent, media and power group Malaysian Resources Corp. slipped 1.4 percent and property company Land and General was off 3.2 percent. Analysts told Down Jones that state funds might come in to play later to keep the market above the psychological 800 level. The shares were frozen in September 1998 when Malaysia imposed capital controls under sweeping plans to keep the economy afloat. The measures thrust 18 billion ringgit (dlrs 4.7 billion) worth of Malaysian stocks and shares, owned by 170,000 Singapore-based investors, into a financial no man's land. After months of negotiations between the Kuala Lumpur and Singapore stock exchanges, a plan was finally agreed to for shares to be released gradually on a staggered basis through Effective Capital, a Malaysian company. About 50,000 investors have agreed to the plan so far. By some accounts, shares worth 60 million ringgit (dlrs 15.7 million) would be offloaded per day. Malaysian
investors have expressed fears that some prominent local stocks will be
battered as Singaporeans begin shoveling away shares, weakening
still-fragile conditions in Malaysia's stock market. An investment report by PhileoAllied Securities, a Kuala Lumpur-based brokerage, said recently that foreign investors regarded the CLOB resolution as a " transparency test" of Malaysia's investment environment.
|