Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Mike McFarland who wrote (5687)	8/20/1998 8:59:00 AM
From: Joseph G.	Respond to of 9980

Guess you've seen this one: <<KUALA LUMPUR, Aug 20 (Reuters) - Malaysia's strategy to drive up share prices masks the country's deeper problems which continue to keep serious investors at bay, Templeton Asset Management's Mark Mobius said. Prime Minister Mahathir Mohamad on Tuesday signalled the government's intent to buy up shares to support the ailing stock market, down some 70 percent from its levels of mid-1997 and at 10-year lows. One day after Mahathir's statement, Kuala Lumpur's benchmark Composite Index gained more than eight percent, its largest single-day move since February. At 0121 GMT on Thursday, the index was up 1.78 percent to 349.58 points. Mahathir also said the government was considering lowering taxes and barring banks from selling stock. ''The tax cut is a very good fundamental move. How permanent that is, is another question,'' emerging markets guru Mobius told Reuters by telephone from Hong Kong late on Wednesday. ''But as regards to these other moves, these are merely bandages in an overall (negative) situation, that of shareholder rights,'' he said. Mobius said investors would only return to the region when they were sure their investments were safe. ''You're not going to get confidence in the markets unless you have transparency and fairness to minority shareholders. The reality in Malaysia is that you have crony capitalism. You have it in almost every country in the region.'' Memories of the purchase of a 33 percent stake in infrastructure giant Renong Bhd (RNGS.KL) by its own affiliate United Engineers (M) Bhd (UTEM.KL) last November continued to haunt investors, Mobius said. UEM paid 2.34 billion ringgit in borrowed funds for the stake. Investors said it was aimed at helping Renong's indebted majority shareholders, sparking one of the largest one-day falls in the Kuala Lumpur Stock Exchange's history. ''It means the small investor and the foreign investor are screwed. Once bitten, twice shy.'' "So they are going to be very careful when coming back. Mobius said Templeton's exposure to Malaysia, which amounted to a few hundred million dollars, was around two percent of its global portfolio. This was down from around 3.5 percent this time last year, he said. ''We don't have any intention of doing very much except there are some companies we do like that are not associated with the political parties. But there's always the fear that these good companies may be called upon to do national service. ''If prices go up, we would probably go down, probably get out, because we don't see the changes I would like to see in Malaysia,'' he said. Mobius criticised recent moves by Hong Kong and Taiwan to shore up their stock markets. ''That's what's missing all over Asia, this concept of long-term investing where an investor feels he is getting a good deal.'' Mobius said he agreed in principle with Mahathir's efforts to curb currency speculation. ''It's gambling basically. I think the next big crash globally is going to be caused by these derivatives which allow people to buy what they don't have and sell what they don't have,'' he said. The only Malaysian group of companies Mobius said he liked was controlled by Robert Kuok's family, including Shangri La Hotels (Malaysia) Bhd (SHGM.KL). Mobius said the group was ''professionally run.'' ($1 equals 4.20 ringgit) >>