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Reuters: M'sia loses out in MSCI stock index re-jig
By Wong Choon Mei

21/5/2001 5:42 am Mon

[Malang demi malang sudah menimpa Malaysia tetapi rakyatnya masih tidur lena terikut rentak diktaktor 'baik'nya yang asyik menyalahkan orang lain dan globalisasi sebagai punca negara semakin musnah dan binasa sedangkan sebenarnya politik kroni menguasai segala-segalanya. Sudah menjadi kebiasaan di negara kita kerajaan berpaut kepada kroni di mana-mana untuk menguatkan mereka - tapi kali ini semua akan terkena - termasuk Ekran yang sudah tidak bermaya dan banyak lagi yang dulunya memuncak langit seronok hidup berbelanja.

Apakah seluruh negara akan sakit lantaran menyiksa seorang hamba tuhan yang tidak berdosa?
- Editor
] pi_news_id=642540&pi_ctry=my&pi_lang=en

Malaysia loses out in MSCI stock index re-jig

By Wong Choon Mei

KUALA LUMPUR (Reuters) - Malaysia's weighting will be cut by more than half in a world stock index that tracks 49 countries, when a two-phase change is completed by compiler Morgan Stanley Capital International by May 31, 2002.

A statement released by MSCI on Saturday showed Malaysia's weighting will be lowered to 0.12 percent from 0.29 in the provisional All Country World Free (ACWI) Index.

MSCI compiles a series of stock indices tracked by some $3.5 trillion of global funds, making any major revamps a much followed event by international investors.

The change harks back to December when the index compiler said it would weigh stock indices using the number of shares available for open trade -- so-called free float -- instead of solely on the basis of market capitalisation.

Ken Chang, vice president of global equity and derivatives strategy in Merrill Lynch, Hong Kong, said Malaysia's weighting in the widely-followed MSCI Emerging Markets Free index would fall 31 percent to 3.99 from 5.78 percent.

"The cuts are more or less in line with our expectations," Chang said.

In the MSCI All Country Far-East Free ex-Japan, Malaysia's weighting would be reduced by 37 percent to 5.4 percent from 8.6.

MSCI described free float as total shares outstanding, excluding shares held by strategic investors such as governments, corporations, controlling shareholders, management and shares subject to foreign ownership restrictions.

The change has been negative for Malaysia. With its high number of firms controlled by the state or state-run agencies, many stocks will see their weightings tweaked downwards.


Among Malaysian stocks most adversely affected by the changes will be the top three market heavyweights -- Tenaga , Telekom and Maybank .

Tenaga's weighting will be slashed 57 percent to 0.47 percent from 1.1, Telekom's by 54 percent to 0.52 from 1.14 and Maybank by 40 percent to 0.56 from 0.93 percent.

"Knee-jerk selling is likely and moves may be exaggerated by thin trading," said fund manager Kenny Tjan, who helps to manage $1.0 billion of stocks and bonds at Singapore-based Rothschild Asset Management.

But a prolonged and heavy sell-off was unlikely as many managers were already holding less than the prescribed MSCI levels while those who still needed to unwind had time to do so.

MSCI has staggered implementation of the free float changes in two phases, beginning November 30, 2001 and ending May 31, 2002.


While another round of heavy disinvestment is not on the cards, Malaysia's importance as a destination for foreign portfolio capital will be dimmed seriously over the long run.

"Malaysia, along with many other Asian markets, has been marginalised at the expense of the more developed and globalised economies, such as Australia, Korea and Taiwan," Tjan said.

To restore its weighting, Malaysian firms must be willing to dance to the beat of globalisation, where more shareholding and control is freed to the public.

Last year, $3.0 billion of foreign portfolio funds exited the market for a host of reasons including excessive government control and interference, corporate governance and slow debt reform.

"A more sustainable catalyst is needed. And it must take the shape of more market-driven policies. A hands-off and less protectionist government policy would do wonders," said Tjan, adding that corporate governance was another crucial criteria.


With the inclusion of free float factors, another 13 Malaysian stocks will be added to the MSCI list to beef up market representation to 85 percent from the previous 60.

These are Courts Mammoth , Genting , Hap Seng Consolidated , Hong Leong Bank , Hong Leong Credit , Hong Leong Industries , IOI Properties , OYL Industries , OSK Holdings , Petronas Gas , Malakoff , Malaysia Airports and Tanjong .

A total of 19 stocks will be dropped by MSCI.

They are ACP Industries , Amsteel Corp , Antah Holdings , Ekran , Hong Leong Properties , Johan Holdings , Kian Joo Can , Land & General , Landmarks , Leader Universal , Malaysian Mosaics , Metroplex , Malaywata , MBF Capital , Pan Malaysian Corp , Pilecon Engineering , Rashid Hussain Holdings , Selangor Properties , Sunway Holdings .