In part, that may reflect the fact that Mahathir ordered all ringgit overseas to be returned to Malaysia. Much of this returning cash ended up being invested in the KLSE, fueling a rally. On another front, the government is encouraging banks to lend by lifting restrictions on them. That could help businesses with cash-flow problems. Sounds like a plan.
Economists say capital controls tend to look worse over time.
For instance, low interest rates may benefit businesses that need to borrow, but they also encourage investors to look for something better. And there are ways to beat currency controls. Under-invoicing exports or overstating imports can allow traders to keep money outside Malaysia. Also, controls are not likely to help Malaysia's banks, which need fresh capital much more than they need freedom to lend. Singapore had served as a parallel trading ground for some corporate shares outside the Kuala Lumpur Stock Exchange.