Slump in Malaysia mote rate

Press, 5 December 1985, Page 64

Slump in Malaysia mote rate

NZPA-Reuter London Malaysian floating rate note issues slumped as much as 80 basis points yesterday on worries over the impact of severe liquidity problems facing some Singapore brokers, before firming to end about 20 to 40 basis points lower, dealers said.

In Malaysia, with its close financial ties to Singapore, the Kuala Lumpur Stock Exchange has decided to join the Singapore exchange in a temporary trading halt. The stock exchange problems have come on top of the lack of progress in the tin crisis which had already been pressuring isues by Malaysia, a major producer. In contrast to yesterday’s price declines for Malaysian issues, the rest of the floating rate note market closed slightly lower in very quiet trading. Dealers said price movements in Malaysian issues were exaggerated by their limited liquidity, as one' commented: “All it takes is for one or two people to bail out of positions to really hit the market.”

Trading yesterday was “mainly professional and extremely jittery," the dealer said. Prices were marked down sharply yesterday morning and recovered a bit on news of a Stock Exchange of Singapore agreement with brokers and banks on a rescue plan to help brokers facing liquidity problems following the financial troubles of Pan-Electric Industries, Ltd, he said. Prices backed off again on subsequent moves to take profits on long positions established at yesterday’s lows, dealers said.