Thursday, December 21, 2006

After Thai, Will It Be Malaysia?

Bank of Thailand had instructed all banks to hold in reserve for one year 30% of the capital inflows. Those who withdraw the reserved amount in less than a year will be fined 33% of the 30% portion. The move somewhat similar to Malaysia when the capital control was imposed in September 1998.

Is history repeating? In today’s scenario, it is not about devaluing the currency, but more of a change in currency policy management. We found the equity market taking a beating, down by 1.9%, while Ringgit vis-à-vis US Dollar fell by 0.59% between 18th December 2006 & 19th December 2006. It should not surprise or upset investors’, despite the local authorities vehemently assuring that the present exchange rate policy management will remain intact. The reason being, in the past we are known for policy inconsistency or ‘flip-flop’ policy. Investors’ fear if the situation in Thailand turns ugly, Malaysia might impose a similar draconian measure to protect its currency and equity market.

If the authorities adhere to their commitment of a more flexible exchange rate policy that is now in place, we can expect investors’ optimism to rekindle. This would benefit both the economy and capital market, taking advantage from potential switching of portfolio from Thailand to other bourses in the region. Under such circumstances, assessment towards the economy and capital market for 2007 is still optimistic .




zentrader said...

This research report is good. TQ

Anonymous said...


at what level our index is going to be before end of this year.

thank u

zentrader said...

should be at level between 883.29 (lowest low this year) and 1110.12 (highest high this year) ... :)

Tauke Saham said...

He he,

I think between 1070 - 1095