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Malaysia Timeline June 11 -- Concern about high interest rates begins to weigh on Malaysian shares, pushing stocks to their lowest level in two weeks. Investors are speculating that the Malaysian government might need to keep interest rates high in order to keep inflation at bay. June 15 -- A larger-than-expected trade deficit due to a decline in April exports combined with continued worries about interest rates kept Malaysian stocks down for the sixth day in a row. The unexpected trade deficit was as a result of worse-than-expected performance by Malaysian electronics companies. The trade deficit will put pressure on Malaysia's currency, something that foreign investors are quite worried about. June 24 -- Malaysia officials are keeping interest rates high in order to defend their currency. These high interest rates, which make it more costly for short-sellers to borrow the currency, unfortunately are causing investors to conclude that economic growth in Malaysia will slow as a result. July 23 -- The ringgit begins to collapse as the exchange rate skyrockets. Ringgit has already edged up from an exchange rate of 2.50 on July 11 to 2.63 today. The exchange rate will continue to climb, gaining momentum as it goes, hitting 3.0 by September and 3.4 by October. A falling currency will prompt the Malaysia government to continue to raise interest rates, squeezing local companies and crimping overall economic growth. July 30 -- Telekon Malaysia Bhd. hits a four-year low as investors continue to liquidate Malaysian holdings. The government continues to ratchet up interest rates to support a falling ringgit. August 5 -- Malaysia posts a much larger-than-expected trade deficit for June, pushing Malaysian shares to a 20-month low on heavy volume. The deficit was much greater than the worst case scenario and the largest in 17 years. Continued pressure on the Malaysian ringgit continues to hurt stocks. August 11 -- The Kuala Lampur Composite has fallen more than 10% so far in August, stricken by the massive trade deficit and the falling currency. August 13 -- The Malaysian government announces plans to slash imports, boost its currency, and tighten up the trade deficit, prompting a huge one-day rally. The Finance Minister states that Malaysia will trim imports of large items like airplanes and boats in order to reduce the deficit. August 22 -- The Malaysian government finishes pushing through laws that will allow Malaysia companies to repurchase shares on the open market. Prime Minister Mahathir brags about the amount of money allocated to repurchase falling shares. August 27 -- The Malaysian government restricts trading in all 100 stocks in the Kuala Lampur Composite in an attempt to stem the losses. Unfortunately, restricted trading does nothing to heighten the confidence of foreign investors. The rule is designed to make it difficult to sell short, but investors are concerned that it could also diminish their ability to buy and sell normally. August 29 -- The Malaysian ringgit hits a 25-year low as countries throughout Southeast Asia increase interest rates to defend their battered currency. Speculation begins that economic growth in the region will be negatively affected by the growing currency crisis. September 5 -- Malaysian shares rally after the government ends trading restrictions on the 100 stocks in the Kuala Lampur Composite. The government also delays some major public works projects. Malaysian stocks break a ten-day down streak by jumping 12.4%. September 24 -- Prime Minister Mahathir threatens to increase government restrictions on foreign trading, causing the local market to fall 4.3%. Malaysian companies continue to be pressured as the falling ringgit makes their foreign debt much more expensive to repay. October 8 -- The ringgit continues a short rally against the dollar, pushing Malaysian shares higher. A stronger ringgit helps companies with foreign debt and shrinks the country's current account deficit by making imports less expensive. October 20 -- Investors sell Malaysian shares out of concern that the government's proposed 1998 budget won't do diddly to help the trade deficit, which will continue to put pressure on the ringgit. The government's proposed growth of 7% for 1998, the slowest in 11 years, still strikes many investors as too high if the country intends to do anything about the trade deficit. Most analysts are looking for 5% to 6%. October 23 -- The Malaysian central bank contemplates another hike in interest rates to support the currency, causing a wave of selling in stocks. Financial companies are particularly hard hit as their margins are squeezed by higher rates and the risk of default on loans goes higher. October 27 -- The prospect of slower economic growth, higher interest rates, and a weaker currency all conspire to make Malaysian stocks pretty darn unattractive.
next page -- Thailand Timeline
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