Where are Asian economies heading?

Capital Market Summit will seek to provide some answers

IN times of uncertainty and market volatility, people will search for information and views to gauge the direction of the economy.

This is what the 13th Malaysian Capital Market Summit in Kuala Lumpur will try to provide to delegates attending the sessions this Thursday and Friday.

The conference, organised by the Asian Strategy and Leadership Institute, will bring together 20 speakers from Malaysia, Singapore Hong Kong and Switzerland.

Deputy Prime Minister and Finance Minister Datuk Seri Najib Tun Razak will give the keynote address on Thursday.

According to Credit Suisse Asian chief economist Joseph Tan, who is one of the speakers, the current economic crisis raises questions about whether Asia was returning to the same predicament as in the late 1990s.

A man walks past a billboard in downtown Kuala Lumpur. While Malaysia’s economy is slowing down, some believe it is not heading into negative growth — AP

“The economic situation in South Korea and Indonesia, plus the political instability in Thailand, make people wonder if we’re back to the Asian financial crisis.

“I’ll be walking the delegates through the entire global financial situation and what it means for us in Asia,” Tan said.

His session will also include an analysis on Asia’s financial linkage with the rest of the world and the possibility of contagion for the region.

“What have we done in the past 10 years that will help us in the current situation? Is Asia exposed to other financial risks?” he said, adding that while the global credit crisis had deepened, Asia’s strength relative to its peers was still intact.

“We’re one of the safest spots in the world,” Tan added.

Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose, who will speak on the first day, said it was important to keep Malaysia’s banking system working by ensuring that liquidity continued to flow.

“Malaysia does not have an inter-bank panic like in Europe or the US but it was proactive on the part of Bank Negara to cut interest rate to keep liquidity going. There was also no need to guarantee deposits but Bank Negara did that too,” he said.

“Malaysia is an open economy; closing it won’t do the trick to counter the current economic crisis,” Ambrose added.

He said while the country’s economic growth was slowing, it was not heading into negative territory.

Meanwhile, Kumpulan Sentiasa Cemerlang Sdn Bhd partner and head of research Choong Khuat Hock will focus his presentation on Malaysia’s debt and equity markets.

“The global credit crisis has resulted in a freeze in the capital market. Both equities and bonds have shrunk significantly. Foreign selling in the stock market has led to a huge drop in valuations, which also affected our foreign reserves,” he said.

He added that there was a distortion in value of US dollar-denominated and ringgit-based bonds issued by Malaysian companies.

“The two can have the same credit ratings but are valued differently. US dollar-denominated bonds are higher-priced than the ringgit-based bonds,” Choong added.

By: Yeow Pooi Ling- The Star