SE Asian financial marts brace for volatile trading
SE Asian financial marts brace for volatile trading
SINGAPORE (AFP): Southeast Asia's financial markets braced
yesterday for volatile trading this week after regional currency
turmoil took a toll on stock prices which plummeted on massive
redemption by foreign funds.
Dealers said all eyes would be on the Malaysian ringgit,
Indonesian rupiah and the Thai baht, all of which slumped to
record lows against the US dollar last week, amid speculation the
currencies had not reached a rock bottom level yet.
Today is to be a holiday in Malaysia, which marked 40 years of
independence Sunday, and in the United States which would have a
long Labor Day weekend.
But as Kuala Lumpur and New York had helped set the pace in
Southeast Asian stock and currency trading last week, the thin
market on Monday could cause greater volatility to the region's
already bruised markets, analysts said.
"Thin trading conditions can actually exacerbate the
volatility," said Andy Tan, general manager of US research house
Standard and Poor's MMS in Singapore.
Analysts said it would be difficult to pin point which of the
regional currencies would come under attack this week as none of
them were spared since Southeast Asian foreign exchange turmoil
erupted with the Thai baht float on July 2.
"There seems to be a pattern of rotational attacks on regional
currencies. It would probably be futile to try to second guess
which currency will fall prey this week," Tan said.
The ringgit tumbled to a new record low of 2.9620 against the
US dollar on Friday before recovering to 2.9000 while the rupiah
plummeted to an all-time low of 3,050 before ending at 2,957.
The Thai baht also dipped to a record low of 34.50 before
recovering a little to end at 34.20 while the Singapore dollar
dived to a 38-month low of 1.5370 on Friday before closing Asian
trading at the 1.5115 level.
"In thin markets, it's so easy to move currency markets, with
50 to 100 million dollars, you can hammer currencies down," a
dealer with a European finance house said.
Dealers said Malaysian Prime Minister Mahathir Mohamad's
denial over the weekend that his deputy, Anwar Ibrahim had
resigned amid Kuala Lumpur's stock market and currency crisis
could dampen sentiment for the ringgit as well as Singapore
stocks.
Malaysia's imposition of share trading curbs to shore up the
stock market, coupled with warnings by Mahathir of more such
controls to check what he termed manipulation by foreign fund has
already taken a toll on neighboring Singapore shares.
The Stock Exchange of Singapore's blue-chip barometer, the
Straits Times Industrials index, lost 7.2 percent last week and
stands at the lowest point since early 1993.
Foreign investors also started bailing out from regional
bourses fearing other countries would emulate Malaysia and impose
more capital and foreign exchange controls to check currency and
share price slides, analysts said.