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Thursday August 23, 3:15 PMMalaysia says well able to handle external shocksKUALA LUMPUR, Aug 23 (Reuters) - Malaysia is confident it can handle any external shocks that may arise from turmoil in global credit markets, the second finance minister said on Thursday."We have shown through periods in our 50 years that we have always had the flexibility and creativity to manage and overcome any crisis," Nor Mohamed Yakcop was quoted as telling reporters by state news agency Bernama. "So if there some are issues or problems in the external environment because of the subprime concern, we are very confident based on our track record over many decades in the 80s and 90s that we will be able to overcome that." Malaysian financial markets have suffered in line with other Asian markets as a run of defaults in the U.S. subprime mortgage market sends shivers through global credit markets, causing a sell-off in both bond and equity markets. But bank analysts say the local banking industry does not have major, direct exposures to U.S. credit markets and relies instead on local deposits for a large part of its funding. Nor Mohamed added that the country's economy was diversified and flexible enough to withstand any downturn, though he said the slide in global markets was not the start of a bear market. "There is no evidence to show that the U.S. economic fundamentals have changed as a result of the subprime crisis," he was quoted as saying. "We are not sure what is happening on Wall Street will have any effect on the main street and our exports are for the main street, not for Wall Street," he added. Manufactured goods, mostly electronics, accounted for 77 percent of Malaysian exports last year, but the government is pushing to expand the services sector and is spending heavily on infrastructure. Competition is also stimulating domestic demand. On Wednesday, the central bank reported foreign reserves of $98.4 billion as of Aug 15, enough to finance about nine months of retained imports. |
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