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

To: Jay Scott who wrote (6563)	9/22/1998 9:20:00 AM
From: George Papadopoulos	Respond to of 9980

Malaysian capital controls a big mistake - Mobius TOKYO, Sept 22 (Reuters) - Malaysia's decision to impose capital and currency controls was ''a big mistake,'' Mark Mobius, managing director of Templeton Asset Management said on Tuesday. ''The reaction by portfolios investors like ourselves is very negative. We feel that this is a big mistake of the top of the Malaysian government, simply because they will not get investments the country requires,'' Mobius, who manages Templeton's Emerging Markets Fund, told reporters at a seminar in Tokyo. With such restriction on foreign capital flows, the amount of portfolio investment into Malaysia, now estimated at $10 billion, is essentially ''locked up and jailed,'' Mobius said. There were good reasons for the government to take measures to prevent the rapid movement of short-term capital flows, but short-term flows could be more easily prevented by a numbers of other steps, he added. They included preventing hedge funds and speculators from borrowing the local ringitt currency and keeping speculators from lending and borrowing stocks so that they cannot short their stocks, Mobius said. However, these measures will hurt portfolio investors as well as the country in the long term. ''So we hope and feel that most other nations will not follow such a policy,'' Mobius said. A solution to Asian financial and banking currency crisis is to eradicate a moral hazard and review legal systems to allow bankruptcies, he said. ''Now these countries are begining to change laws and regulations to allow bankruptcies,'' Mobius said. ''As a result of that, you will begin to see money coming back to these countries.'' He saw this process taking place in Thailand and Indonesia. Moreover, recapitalisation will be another solution to Asian financial crisis, he said. ''Most importantly, foreign investors are now begining to come to take up these assets, of course, at low prices,'' he said. Mobius said that an example was General Electric's (NYSE:GE - news) finance unit which recently purchased $1 billion worth of loans from bankrupt finance company in Thailand. "A bear market does not last forever," he said. -