Rating cut seen for Thailand, Malaysia

Rating cut seen for Thailand, Malaysia

NEW YORK (Reuter): Asian financial market turmoil would likely
pull down the credit standing of Thailand, Malaysia and Korea,
said John Seel, Asia economist at Bear Stearns.

In a tele-conference with investors, Seel, who is based in
Hong Kong, said Thailand had not demonstrated an effective
response to its financial crisis and especially to its troubled
banking sector.

"Thailand has not bottomed out," he said.

Malaysia is also veering into deeper economic difficulty as
the "bad policy mix" and sharp rhetoric of Prime Minister
Mahathir Mohamad continued hurt investors' confidence, he said.

Korea is currently stuck in a "policy stalemate" before the
presidential election in December, he said.

The government appeared inclined to "sacrifice sovereign
rating to prop up the banking sector," Seel said.

In addition, the financial burdens of integrating North Korea
with the South, if the unification scenario plays out in the next
two to three years, would shave another notch of credit stance
for Korea, he noted.

As a result, Seel said that these three countries have greater
potential of receiving a downgrade than Indonesia and the
Philippines.

The "trigger point" for turnaround in these once robust Asian
economies is to identify the time when the governments of those
countries adopt policies for long-term growth, not just short-
term fixes, he said.