A Malaysian deputy minister Tuesday blamed development in the United States and China and political instability in the Middle East for the decline in the local stock market.
The benchmark index had fallen from the year's high of 1,013.27 points on February 18 to 765.20 points on October 17 due to both internal and external factors, said Deputy Finance Minister Shafie Mohamad Salleh.
Concerns over the impact of high oil prices on world economies and uncertainty on Wall Street before next month's US presidential election have weighed on the market, he was quoted as saying by Bernama news agency.
He said foreign investors were also turning to China.
Speaking in parliament, Shafie acknowledged that slow corporate reforms in Malaysia were also hampering the stock market's performance.
But Shafie said the Kuala Lumpur Stock Exchange had generally outperformed markets in Thailand, Indonesia, South Korea and Japan.
The value of foreign trades on the KLSE accounted for 23.7 percent of the total in 1997, 27.4 percent in 1998 and 16.9 percent last year, he said. But this rose to 34.38 percent in May and 39.81 percent in June.
Additional measures, including enhancing local corporate governance standards, were under way to strengthen the KLSE, he added.
Responding to an opposition question, Shafie said the KLSE's volatility was not due to Prime Minister Mahathir Mohamad's trips abroad.
Many analysts say a 10 percent exit levy on profits for foreign market investors is a disincentive. They expect it to be scrapped in Friday's budget -- KUALA LUMPUR (AFP)
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