WASHINGTON, D.C., September 28, 1998 --- The International Finance Corporation will remove Malaysia from its index of stocks that are available to foreign investors because of the imposition of capital controls earlier this month and the lack of clarity on what the controls mean for international investment. After the close of business on September 30, the IFC Investable Composite Index and Investable Asia Index will not include Malaysia, barring relaxation of the capital controls prior to that date.
Under the controls, foreign investors are required to lock in capital in Malaysia for at least one year before it may be repatriated. Equally, IFC concluded that the current level of uncertainty regarding administration and interpretation of the new controls constitutes a serious constraint on investability and, in effect, forces investors to avoid the Malaysian stock market altogether.
Because many investors are compelled to maintain Malaysian share exposure under the controls and need to track appropriate benchmarks, IFC will continue to calculate an IFC Investable Malaysia index on a stand-alone basis and will produce a series of Composite and regional indexes "plus-Malaysia".
Malaysia will continue to form part of the IFC Global (IFCG) Composite and IFCG Asia indexes which show the performance of the most active stocks in their respective stock markets from a domestic investor’s perspective. They are the broadest possible indicators of market movements irrespective of their availability to foreign investors.
As of September 25, IFCI Malaysia was 5.9 percent of the IFCI Composite index and 21.6 percent of the IFCI Asia index.
IFC indexes are part of the IFC Emerging Markets Data Base, which provides comprehensive, reliable statistics on emerging stock market performance in order to stimulate the flow of private capital to emerging markets. Information and daily updates are available on the IFC website at: www.ifc.org/EMDB/EMDBHOME.HTM
