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Kuala Lumpur bourse world's worst performer; regional markets hit by Malaysian tumble

Straits Times
21 November 1997

Singapore's bellwether Straits Times Industrials Index dropped 39.94 points to end the day at 1641.03, 2.38 per cent down.

A new reform package announced by Seoul failed to stanch South Korea's haemorrhaging currency and stocks. The won plunged to a new low of 1,139 to the US dollar and the Seoul stock market closed the day down 2.8 per cent to 488.41 points. Other Asian currencies tumbled in reaction to the South Korean slide.

Malaysia's markets crumbled after the government announced a takeover of the Bakun Hydroelectric project, read by some as a rescue act for its main developer Ekran Berhad. That came a bare two days after cash-rich United Engineers Malaysia paid M$2.3 billion (S$1.08 billion) to buy shares in parent company Renong in another apparent bailout.

Its currency also slumped to a new low, dragging down the Singapore dollar with it. The ringgit closed at 3.5040 to the US dollar, while the Singdollar closed at 1.6000 to the greenback, a level not seen since February 1994. A Singdollar would fetch M$2.19.

With yesterday's 11.08 drop by the KL Composite Index, the key Malaysian bourse has dropped 20 per cent this week and seen nearly 57 per cent of its value wiped out since the beginning of the year. The Stock Exchange of Thailand has fared better in comparison, dropping 49.23 per cent for the period.

Considered in US dollar terms, which is the way many of the foreign investors now fleeing Asian markets calculate their holdings, the losses are even worse.

Malaysian stocks would have shed close to 69 per cent against a 67 per cent loss in Thailand, over 55 per cent eroded in Philippines stocks and about 59 per cent lost in Indonesia.

"We are heading towards a miserable Christmas and there is no guarantee the new year will be any better," analyst Alison Seng of Standard and Poor's MMS told The Straits Times yesterday. "Singapore is reacting to Malaysia because we have a lot of investments there. The Indonesians and the Taiwanese and Hongkongers are reacting to Korea. The weakness catches on," she said. Elsewhere, Hongkong's benchmark Hang Seng Index fell 103.68, or 1 per cent, to 10,050.68.

Indonesian stocks fell 4.7 per cent to its lowest point in four years as the Jakarta Stock Market Composite Index fell 19.52 points to 396.13, its lowest close since August 1993.

Only Tokyo's benchmark Nikkei 225 index seemed to have gained any real confidence yesterday, rising 466.03 points, or 2.94 per cent, to 16,308.49. Investors were cheered by reports of possible use of public funds to assist financial institutions burdened with massive bad debts

. Thailand appeared to balk the regional trend partially. The baht was unscathed but the stock market fell 2.8 per cent to 422.18, an eight-year low. The Philippine peso was off slightly at 34.81 to the greenback from Wednesday's 34.73 and the composite index of stocks ended virtually unchanged at 1872.75.

Copyright =A9 1997 Singapore Press Holdings Ltd. All rights reserved.

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