Malaysia, Singapore share row needs govt intervention<\/p>\n
KUALA LUMPUR (Reuters): A row over frozen Malaysian shares
\nonce traded in Singapore is getting pushed into the growing list
\nof unresolved bilateral issues between Kuala Lumpur and the
\nisland republic.<\/p>\n
Analysts said government intervention was needed to unlock the
\nshares of Singapore investors after they rejected an offer from a
\nKuala Lumpur-based businessman to buy them out at deep discounts
\nto current market prices.<\/p>\n
For the moment, the two governments are taking completely
\ndifferent approaches in resolving the issue which has frozen
\nshares of 172,000 Singapore investors worth US$2.8 billion in 112
\nMalaysian corporations.<\/p>\n
Kuala Lumpur is saying it is a private sector matter and, at
\nbest, between the stock exchanges of the two countries, while the
\nSingapore government has said it will help its investors in
\nfinding a solution, but will not fund any buyouts.<\/p>\n
"It originally was a dispute just between the stock exchanges,
\nbut I think it has now assumed the proportions of a diplomatic
\nrow," said Bhanu Baweja, economist with economic think-tank
\nI.D.E.A. in Singapore.<\/p>\n
"While Malaysia is saying that it's Singapore's problem,
\nthat's not entirely true because these are investors who have
\ninvested in Malaysian companies directly. Therefore it's not only
\na Singapore problem," he said.<\/p>\n
Singapore investors were stuck with the shares after Malaysia
\nimposed capital controls last September and declared the Central
\nLimit Order Book (CLOB) over-the-counter market, where the
\nMalaysian shares were traded, illegal.<\/p>\n
Under pressure from angry investors and probably fearing a
\nlegal backlash, the Stock Exchange of Singapore (SES) has since
\nthen unsuccessfully tried to restore trading in the shares by
\ntransferring them to the Kuala Lumpur Stock Exchange (KLSE).<\/p>\n
The simmering issue erupted into a heated debate last week
\nafter Singaporean businessman Akbar Khan, a permanent resident of
\nMalaysia, offered to buy the shares at discounts of up to 85
\npercent to current market prices.<\/p>\n
The sense of urgency created by Khan's offer, which has
\nMalaysian regulatory approval, is giving way to the realization
\nthat the proposal is probably only an opening gambit.<\/p>\n
But many believe that a revised offer from Khan would not be
\nmuch better and, therefore, the issue needs a political
\nresolution.<\/p>\n
Singapore Deputy Prime Minister Lee Hsien Loong told his
\ncountry's parliament that Malaysia had rejected a proposal to
\ninclude the CLOB issue in the bilateral package awaiting
\nresolution between the two countries' leaders.<\/p>\n
Ties between the neighbors have been strained over the last
\nyear over issues such as the supply of water to Singapore, a
\nMalaysian decision to restrict Singapore's access to its airspace
\nand the location of a railway customs and immigration operations.<\/p>\n
"I think it is going to be linked to other items in the
\nbilateral package, then we may find EPF (Employees Provident
\nFund) and other such funds taking over the shares," said the head
\nof a futures brokerage in Kuala Lumpur.<\/p>\n
Analysts also said that Kuala Lumpur had little to worry about
\neven if all CLOB shares came into the market. In terms of
\ncapitalization, they said, CLOB makes up only about 2.5 to three
\npercent of KLSE's capitalization.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/malaysia-singapore-share-row-needs-govt-intervention-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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