From The Singapore Straits Times, 28th November 2000'POOR CORPORATE GOVERNANCE'

KUALA LUMPUR - Foreign portfolio investors are pulling out of Malaysia and analysts said yesterday the outflow would continue until companies respect the rights of minority shareholders and move further on corporate reform.

Analysts blamed the exodus of foreign funds on poor corporate governance which made foreign fund managers move to other high-growth but more transparent markets in Asia.

'It's not surprising the way the stock index has been falling. Foreign funds have been selling in large blocks,' said chief asset manager Chong Sui San at Malaysia British Assurance.

During the seven weeks from mid-August to early October, the benchmark Kuala Lumpur Composite Index had tumbled 12.7 per cent to 707.9 points.

At the close yesterday, the index stood at 731.09 points, down 28.4 per cent from the year-high of 1,021.2 on Feb 18 and 10 per cent lower than the end-1999 level of 812.33.

Senior analyst Andrew Seah at Vickers Ballas said foreign portfolio managers were tired of being at the losing end in many of the country's large corporate restructuring and debt reduction plans.

Foreign funds started returning to Malaysia in the first half of this year as the nation, led by strong electronics exports, rebounded from the Asian financial crisis.

But despite sizzling exports and subdued inflation, portfolio investors do not seem impressed enough to keep their money in the domestic market.

Analysts say poor market practices overshadowed economics and worried investors. --Reuters