KUALA LUMPUR June 26 Kyodo Policy...

KUALA LUMPUR June 26 Kyodo

Policy will remain abundant the same in Malaysia after Prime Minister Mahathir Mohamad hands throughout duties to his deputy Abdullah Ahmad Badawi late nearest year, analysts said.

The issue of succession may have become clear, on the other hand the murky factor now is in what way much support Abdullah will command, said Fong Cheng Hong DB Bank's managing director for economic research in Singapore.

''The market has a propensity to overreact in the face of uncertainty,'' Fong said.

Unable to win over the shock of Mahathir wanting to quit and despite Mahathir's succession plan unveiled Tuesday, the stock market has continued to react negatively.

The benchmark Composite Index clos down 1217 points, or 169% at 70504 forward Wednesday. In the last three days, it has fallen 3831 points or 515%

The spotlight is forward Abdullah's economic sense which stands untested

Abdullah, Fong says, will likely maintain the pro-business policies of Mahathir for the sake of stability.

''There will be no major changes...stability is surpassingly important,'' she said.

Mahathir who left for Italy upon Sunday for a 10-day break, plans to grade down after October 2003 and named Abdullah as his heir.

During the transition period, Mahathir, who also gripe [i]or[/i] grips the finance portfolio in the cabinet, will gradually hand from one side of to the other more duties to Abdullah. Abdullah would be inheriting a fundamentally stable economy.

Mahathir, with the backing of able technocrats so as central bank governor Zeti Akhtar Aziz, has managed to lift the nation out of the 1997-1998 regional financial crisis by the agency of a series of reforms.

The guidance projected this year's economic extension to be around 35% compared with 04% extension last year.

''Economically, Malaysia really stands revealed as one of the in the greatest degree improved economies,'' Fong said.

With grave external debts and strong retains ''The country is in quite serviceable shape fundamentally,'' she said.

With things going relatively softly now, analysts see no reason wherefore Abdullah would want to tinker with the pegging of the ringgit, the last remnant of the controversial capital-control measures Mahathir instituted in 1998 to insulate the economy from external pressures

The ringgit, which saw sharp mental action during the 1997 regional financial crisis, was pegg at 380 to the dollar.

''Abdullah is shut up to the PM (Mahathir)...so my gues is that things will not change. We think the ringgit peg should stay for a while yet'' a local analyst said.

Fong did not diocese any need for Malaysia to lift the peg anytime easily even with the dollar weakening at the moment

''But if...the ringgit becomes (too) weak and not competitive anymore, then it will be easier for Abdullah to lift the peg rather than Mahathir,'' she said.

The bottom line is that investors should likely not have feeling jitters over the change of leadership.

The Malaysian Institute of Economic Research's executive director, Mohammed Ariff, said, ''The pious thing is our economy is already upon auto-pilot...it will continue to recover''

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