Money leaving Malaysia in massive amounts and bizarre fashion

(Free Malaysia Today) – Malaysia’s once strong foreign exchange reserves is bordering on collapse, according to a UBS Securities Asia Limited report.  It says that in 2009,  Malaysia experienced the biggest foreign exchange reserve losses among Asian countries.

It says official reserves fell by  more than one-quarter on a valuation-adjusted basis.

Describing the situation as bizarre, it notes that Malaysia used to have the largest current account surplus in Asia–at around 17% of  GDP.

“Over the past 12 months, Malaysian reserves nearly collapsed” while neighbours like Thailand, Singapore, Taiwan, Hong Kong and China “have seen  sizeable increases,” it says.

It says foreign capital outflows from Malaysia in the last year was nearly 50 percent of its GDP.

“When we measure implied net flows using the same rough methodology as in used on Russia,  the numbers are simply stunning.  [Malaysia showed] peak outflows of nearly 50% of GDP,” it says, noting that the outflow was larger than anything witnessed in the world of emerging markets (EM).

The report also says Malaysia over the past 12 months recorded one of the biggest base money contractions in the entire EM world.

It asserts that recent outflows were “far, far bigger than those Malaysia experienced in the 1997-98 Asian financial crisis.”

The full report follows: