ID :
149666
Fri, 11/12/2010 - 16:45
Auther :
Shortlink :
https://oananews.org//node/149666
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ENTRY OF FOREIGN FUNDS MUST BE CONTROLLED, CAUTIONS FORMER PM MAHATHIR
From Iswandi Kasan Anuar
LABUAN (Malaysia), Nov 12 (Bernama) -- The entry of foreign funds into the
country must be controlled to ensure the stability of the capital market, says
former Prime Minister Dr Mahathir Mohamed.
He said the monitoring bodies must know whether the incoming investors are
genuinely seeking for dividends or only want the benefits of capital gains.
The entry of a lot of foreign funds can be seen when share prices go up very
high, he told reporters at the Labuan International Islamic Lecture Series V
organised by the Labuan Financial Services Authority here Thursday.
Dr Mahathir said the funds came normally from institutes that had huge funds
such as pension funds in the US.
"That's what they do even in US itself. In US they buy certain stocks, push
it up, then dump and take the money out," he said.
During the Asian financial crisis, the Kuala Lumpur stock exchanges's
Composite Index fell to 262 from 1,300 points as the players removed much of the
capital from the market when prices shot up and reaped profits as the ringgit
depreciated in value.
"I am a little uncomfortable with the rise in the Bursa index due to
increase in foreign investments. They come to push up share market prices. When
the price goes up, they may sell to get profit, and when Bursa comes down, the
locals will be bearing the brunt of it.
"Don't be too impressed with the entry of funds to buy shares. The injection
of capital - foreign direct investment - to set up factories and produce goods
is much better," he cautioned.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) climbed up
1.48 points or 0.097 per cent to record the highest level in history for two
consecutive days to 1,528.01 on Wednesday.
On Nov 11, the CI dropped 14.31 points to 1,513.70 following profit taking
activities.
Market analysts expect the uptrend to continue to February next year amid
the flow of foreign funds especially from the US where the US Federal Reserves
has pumped in US$600 billion into the US economy.
Dr Mahathir also said the ringgit peg should have not been taken off in 2005
as although the ringgit strengthened, the consumers were not gaining from its
strength.
He said there was no need to stop the policy of pegging the ringgit (the
ringgit was pegged at 3.80 to the US dollar for seven years). The other
countries are now pegging their currencies, he added.
--BERNAMA
LABUAN (Malaysia), Nov 12 (Bernama) -- The entry of foreign funds into the
country must be controlled to ensure the stability of the capital market, says
former Prime Minister Dr Mahathir Mohamed.
He said the monitoring bodies must know whether the incoming investors are
genuinely seeking for dividends or only want the benefits of capital gains.
The entry of a lot of foreign funds can be seen when share prices go up very
high, he told reporters at the Labuan International Islamic Lecture Series V
organised by the Labuan Financial Services Authority here Thursday.
Dr Mahathir said the funds came normally from institutes that had huge funds
such as pension funds in the US.
"That's what they do even in US itself. In US they buy certain stocks, push
it up, then dump and take the money out," he said.
During the Asian financial crisis, the Kuala Lumpur stock exchanges's
Composite Index fell to 262 from 1,300 points as the players removed much of the
capital from the market when prices shot up and reaped profits as the ringgit
depreciated in value.
"I am a little uncomfortable with the rise in the Bursa index due to
increase in foreign investments. They come to push up share market prices. When
the price goes up, they may sell to get profit, and when Bursa comes down, the
locals will be bearing the brunt of it.
"Don't be too impressed with the entry of funds to buy shares. The injection
of capital - foreign direct investment - to set up factories and produce goods
is much better," he cautioned.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) climbed up
1.48 points or 0.097 per cent to record the highest level in history for two
consecutive days to 1,528.01 on Wednesday.
On Nov 11, the CI dropped 14.31 points to 1,513.70 following profit taking
activities.
Market analysts expect the uptrend to continue to February next year amid
the flow of foreign funds especially from the US where the US Federal Reserves
has pumped in US$600 billion into the US economy.
Dr Mahathir also said the ringgit peg should have not been taken off in 2005
as although the ringgit strengthened, the consumers were not gaining from its
strength.
He said there was no need to stop the policy of pegging the ringgit (the
ringgit was pegged at 3.80 to the US dollar for seven years). The other
countries are now pegging their currencies, he added.
--BERNAMA
