Asian capital markets need transparency

Asian capital markets need transparency

KUALA LUMPUR (AFP): Asian capital markets would require
greater transparency and integrity to mobilize funds as they
develop rapidly in tandem with their booming economies, officials
and analysts said yesterday.

"We have to assure investors that capital markets are fair and
transparent to raise the confidence and comfort level of savers
to invest their hard-earned money through capital markets," Linda
Tsao Yang, U.S. executive director of the Manila-based Asian
Development Bank (ADB) said.

Asia would require capital at an estimated rate of 130 billion
dollars yearly by 2000 to fund massive infrastructure projects,
Tsao said at the end of a two-day Asian capital markets
conference here.

The region imports capital of about US$20 billion annually,
she told some 350 delegates from 11 countries at the conference.

The ADB estimated that up until 2000, the region needed $350
billion for power, $150 billion for telecommunications, $350
billion for transportation and $100 billion for water and
sanitation.

Tsao warned that inflow of foreign capital to the region could
diminish due to fierce competition for funds from Russia, the
former eastern bloc, Latin America and Africa as well as
budgetary constraints in most industrialized countries.

"We need effective and efficient capital markets, which can
for example provide timely disclosure of relevant information, to
channel international capital, especially risk capital, to
finance economic growth," Tsao said.

But Asian capital market officials said their governments were
undertaking numerous measures to enhance liquidity, market
efficiency and transparency as well as modernize and deepen the
markets.

They said relaxed rules on foreign participation were
attracting huge amounts of money into regional stock markets and
giving increased liquidity and trading volumes.

Indonesia

Hasan Zein Mahmud, president of the Jakarta Stock Exchange,
said Indonesia would adopt a new capital market law soon to
delegate regulatory responsibilities to stock exchanges and
ensure supporting agencies were self-regulated.

"When there is sugar, there will be ants. So, the bottom line
is that the market should provide a globally competitive return
on investment," Hasan said, adding that Indonesia was further
deregulating to be more competitive.

He said the Jakarta Stock Exchange, the region's smallest in
terms of market capitalization, was working on a tight deadline
to install a new computerized system of trading as well as
putting all regulations in place to support the system.

The Philippines was considering ways to expand the country's
capital market interest in purchasing securities issued by
companies formed to undertake infrastructure facilities, Finance
Secretary Roberto de Ocampo said.

"This would diversify the funding base for infrastructure
projects and permit the local content component of an
infrastructure project to be funded in local rather than foreign
currency," Ocampo said.

Shinya Akiyama, managing director of Hong Kong-based Daiwa
Investment Advisors, said Asian stock markets had experienced an
explosive market capital expansion stemming from increasing
equity investments in the region.

The number of listed companies in the eight major Asian
regional stock markets, excluding China, had more than doubled
from 1,335 to 2,800 between the 1985 and 1993 period, Akiyama
said.

Market capitalization of the eight markets reached $1.3
trillion by the end of 1993, a 16-fold increase from 1985, he
said.