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.