ASEAN policy on Cambodia hailed<\/p>\n
HONG KONG (Reuter): Fund managers yesterday welcomed ASEAN's
\ndecision to postpone Cambodia's entry into the group, but said
\nthe recent chaos in the country was unlikely to damage already
\nweak sentiment towards the rest of Asia.<\/p>\n
\"I think it would have called into question the credibility of
\nthe organization,\" said Eugene Chung, regional strategist at SBC
\nWarburg.<\/p>\n
Sources said the Association of South East Asian Nations had
\ndecided to postpone Cambodia's induction into the group at an
\nemergency meeting in Kuala Lumpur yesterday.<\/p>\n
Cambodia, Laos and Burma were set to join the group at the end
\nof this month. ASEAN groups Brunei, Indonesia, Malaysia, the
\nPhilippines, Singapore, Thailand and Vietnam.<\/p>\n
ASEAN's decision to include Burma first grabbed attention from
\nWestern nations, but the spotlight quickly swung to Cambodia when
\nfighting erupted in last weekend's virtual coup by the nation's
\nsecond prime minister, Hun Sen.<\/p>\n
Hun Sen is effectively in control of the capital Phnom Penh
\nand well entrenched in the south and east of the country, while
\nforces loyal to his ousted rival, First Prince Norodom Ranariddh,
\nare regrouping in their traditional strongholds in the north and
\nnorthwest of the country.<\/p>\n
\"What is ASEAN supposed to mean?\" Chung asked. \"Taking money
\nout of ASEAN, that kind of rejection wouldn't be associated with
\nan increase in political risk (had they gone ahead), it would
\nhave been associated with the credibility of the organization.\"<\/p>\n
International protests would have been inevitable, he said.
\nMost international investors are well-versed in a country's
\npolitical risk before they invest, but Cambodia could well face
\nthe loss of foreign direct investment from countries such as
\nMalaysia, Japan and Singapore.<\/p>\n
But the effect on regional stock markets would be minimal.<\/p>\n
\"I don't think there is any particular issue that is likely to
\ninfluence financial markets in Asia from what's arising in
\nCambodia,\" said Stewart Aldcroft, director of marketing at
\nTempleton.<\/p>\n
\"If there is any market likely to be affected, it's possible
\nto be those around it, including Thailand. But Thailand is
\nalready pretty well worked out as a market, so I wouldn't expect
\ntoo much (impact).\"<\/p>\n
Currency weakness in the Philippines was a far more serious
\nfactor for sentiment than Cambodia, fund managers said.<\/p>\n
\"Well, hell, yeah,\" said one institutional investor, when
\nasked whether speculation on the peso was more important than
\nCambodia. \"I think the peso's going to go.\"<\/p>\n
The Philippine Central Bank raised its key overnight borrowing
\nrate by two percentage points on Thursday to 32 percent, the
\nhighest in 2-1\/2 years, to keep the peso at about 26 to the U.S.
\ndollar.<\/p>\n
The overnight rate has roughly doubled in the past week as the
\nCentral Bank tries to spare the peso the fate of Thailand's
\ncurrency.<\/p>\n
There were reports of massive intervention, with US$300
\nmillion reportedly dumped into foreign exchange markets on
\nWednesday. Speculation on the peso followed Thailand's July 2
\nfloat and effective devaluation of the baht.<\/p>",
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"sponsor": "Okusi Associates",
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