CAPITAL MARKET REVIEW CONTENTS

AnnualReport2000SettingNewHorizonsfortheMalaysianCapitalMarketSecuritiesCommissionNo.3PersiaranBukitKiara,BukitKiara,50490KualaLumpur,Malaysia.SecuritiesCommission2000ANNUALREPORTMissionSTATEMENT“Topromoteandmaintainfair,efficient,secureandtransparentsecuritiesandfuturesmarketsandtofacilitatetheorderlydevelopmentofaninnovativeandcompetitivecapitalmarket.”SECURITIESCOMMISSION2000ANNUALREPORTCONTENTSiiCONTENTSCHAIRMAN’SSTATEMENTMEMBERSOFTHESECURITIESCOMMISSIONPART1CAPITALMARKETREVIEWGLOBALREVIEWDEVELOPEDMARKETSREGIONALMARKETSEX-JAPANMALAYSIAOUTLOOKPART2DEVELOPMENTALREVIEWOPERATIONALREVIEWCORPORATEPROPOSALSFUNDMANAGEMENTANDCOLLECTIVEINVESTMENTSCHEMESMARKETINSTITUTIONSMARKETINTERMEDIARIESFINANCIALREPORTINGSURVEILLANCEANDCOMPLIANCEENFORCEMENTEDUCATIONANDTRAININGINTERNATIONALAFFAIRSINTERNALREPORTFINANCIALSTATEMENTSAPPENDICESCALENDAROFEVENTSACTS,GUIDELINESANDOTHERPUBLICATIONSMANAGEMENTDIRECTORYORGANISATIONSTRUCTUREiiixv1-11-21-131-231-341-502-12-292-302-352-402-452-572-602-702-782-832-892-1032-1042-1142-1172-119Chairman’sStatementCHAIRMAN’SSTATEMENTSECURITIESCOMMISSION2000ANNUALREPORTvAswewelcometheyear2001,letusreviewthepastyearandpreviewwhatthecomingyearwillbring.Asalwaysdiscoveredinsuchanendeavour,whilewecanpindownouryesterdaywithagreatdegreeofaccuracy,wedonotknowwhattomorrowmaybring.Bethatasitmay,itisstillimportanttounderstandwhatthefutureholds,notonlytomeasuretheviabilityofexistinginitiativesbutalsotodevelopnewcapabilitiestooperateinachangedenvironment.Whatisneededistoassesstherangeofpossibilitiesthatmayarisesoastobeinabetterpositiontoimplementwinningstrategiestomeetthedifferentcircumstances.Foryear2000,whatemergedmostclearlywasthegovernment’ssuccessinfashioningMalaysia’sownpathtorecovery.Aidedbystrongmacroeconomicfundamentals,expansionaryfiscalandmonetarypolicies,andstrongexternaldemand,especiallythewindfallfromhigheroilprices,theeconomycontinuedtopostoneofthemostimpressivegrowthratesinAsia.Startingwithanastounding11.9%inthefirstquarter,GrossDomesticProduct(GDP)growthforthewholeyearaveragedtoanestimated7.5%.Furthermore,theseeconomicexpansionfiguresweresupportedbyencouragingindicatorsofsustainablegrowthsuchasthestableinflationaryenvironment,whichmoderatedto1.5%,andthecountry’scontinuedenjoymentoffullemployment.TheKLSECompositeIndex(KLCI),whichexperiencedasharpresurgencefromthedepthsofthefinancialcrisis,peakedatmorethan1,000pointsinFebruary2000.SinceMarch2000however,aswithmoststockmarketsintheregion,theKualaLumpurStockExchange(KLSE)CHAIRMAN’SSTATEMENTreverseditsdirection,sheddingmuchofthepreviousgains.TheKLSEeventuallystabilisedtoabout30%lessthanthepeaksitachievedinJanuary2000.Butswingsinthefinancialmarketsshouldnotbeconfusedwithchangesintheunderlyingeconomicreality.Prospectsfor2001appearmorechallenging.Themajorexternaleconomicfactorhamperingamorepositiveoutlookfor2001isthehealthoftheUnitedStates(US)economy,which,afteryearsofexceptionalgrowthisshowingdistinctsignsofaslowdowninitsrealeconomy.MalaysiaexportsslightlymorethanafifthofitsproductstotheUSanditsrecoveryfromthe1997-98recessionwaslargelyexport-driven.Hence,anysharpslowdownintheUSwouldmarkedlyaffecttheMalaysianeconomy.Thisslowdowninexport-drivengrowthisexpectedtotranslateintoamoremoderateforecastedGDPgrowthof7%for2001ascomparedto7.5%in2000.BasedontheFederalBudgetfor2001,thegovernmentiscommittedtosupportingeconomicgrowthviameasurestopromoteconsumerspending(asidefrompublicspendingpolicies),developnewsourcesofgrowthandenhancenationalcompetitiveness.Althoughthejuryisstillout,therearethosewhobelievethatthesemeasurestosupporteconomicgrowthareallthemoreinsightfulgiventhatMalaysiamaybeaprimebeneficiaryofaneconomicslowdownintheWest,asmultinationalcorporationsmovetocutcostsathomebyoutsourcingproduction.ThisexpansioninrealeconomyissubsequentlyexpectedtoleadtoacorollarysurgeinequityinvestmentsasglobalinvestorslooktomarketswithgoodfundamentalsbutlowvaluationssuchastheKLSE.SECURITIESCOMMISSION2000ANNUALREPORTCHAIRMAN’SSTATEMENTviSettingaClearDirectionforCapitalMarketDevelopmentThetaskbeforetheSecuritiesCommission(Commission)thereforeistosoldieronovermanyfrontstostrengthentheMalaysiancapitalmarketandfurtherdevelopitsresiliencetowithstandshocksarisingfromvolatileinternationalcapitalflows.Wewillindeedbefacinginterestingtimesahead.Amidthismoredynamicandcompetitiveglobalenvironment,theCapitalMarketMasterplanwhichwaspresentedtotheMinisterofFinance,Y.B.TunDaimZainuddin,inOctober2000andsubsequentlyreceivedhisapprovalinDecember2000,presentsastrategicblueprintforthedevelopmentofacapitalmarketforMalaysiathatiswell-positionedtomakeasignificantcontributiontowardsthecountry’snationalaspirations.TheMasterplanenvisagesthatMalaysiawillbeabletoestablishacapitalmarketthatisinternationallycompetitive,providesanefficientconduitforthemobilisationandallocationoffunds,andissupportedbyafacilitativeandstrongregulatoryframework.TheMasterplanmarksasignificantmilestoneintheevolutionofthecountry’scapitalmarketandisthefirstcomprehensiveplantochartthemarket’sdevelopmentoverthenextdecade.Thecollective