Comment
Investing
in Malaysia is taking too much risk?
May 10, 2001
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Related Comment: Re-pegging the Malaysian Ringgit Apr 24, 2001 The re-pegging of the ringgit is no longer a crazy idea in the sense that it is incredible to think that China would unfixed the RMB or Hong Kong would remove their US dollar peg and currency board. It is interesting to see the numbers in various models on why and when there will be a re-pegging. But the thought of such a possibility is itself very unsettling. Unless you have such extraordinary risk appetite or that your investment in Malaysia is strategic, why would you want to be there at all? Alternatively, if you believe that you know how to park assets so well, because of special understanding and knowledge of Malaysia that you would still come out well by all means get in or stay put. It could be frightfully educational if the outflow increases and accelerates beyond the 1 billion USD a month. There is no safety until the flow reverses. Also the fund flow is not likely to remain at this rate. The more money stays outside, the more remaining money wants to follow. The rate of money flow outside is anything but constant. We must
not underestimate the danger Malaysia is facing. Until we see the 1
billion a month slows, it is just very risky. Malaysia's well being
unfortunately depends very much on the external environment. |
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