[KUALA LUMPUR] Indebted, commodity-dependent Malaysia will be in
investors' crosshairs on Wednesday as heavy selling of Indonesia and
India's currencies threatens to spread to other Asian economies seen as
most vulnerable to a withdrawal of US monetary stimulus.
After Indonesia, where concerns over a gaping current account deficit sparked a stock market and currency rout this week, Malaysia and neighbouring Thailand are seen as the most vulnerable Southeast Asian markets to contagion effects.
"There is a lot of resemblance to prior crises like 1997-98. We have had two countries going down, India and Indonesia, and now you have got to start thinking about the third and fourth countries," said Pradeep Mohinani, a Nomura credit analyst in Hong Kong.
"The likely candidates would be those with high fiscal deficits, slowing economies and high foreign ownership of government bonds. Thailand and Malaysia tick most of the boxes in that regard."
Economists say that both those countries, as well as the fast-growing Philippines, are to some extent protected from major turmoil by their much stronger external balances compared with Indonesia and India.
After Indonesia, where concerns over a gaping current account deficit sparked a stock market and currency rout this week, Malaysia and neighbouring Thailand are seen as the most vulnerable Southeast Asian markets to contagion effects.
"There is a lot of resemblance to prior crises like 1997-98. We have had two countries going down, India and Indonesia, and now you have got to start thinking about the third and fourth countries," said Pradeep Mohinani, a Nomura credit analyst in Hong Kong.
"The likely candidates would be those with high fiscal deficits, slowing economies and high foreign ownership of government bonds. Thailand and Malaysia tick most of the boxes in that regard."
Economists say that both those countries, as well as the fast-growing Philippines, are to some extent protected from major turmoil by their much stronger external balances compared with Indonesia and India.
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