Prime Minister Abdullah Ahmad Badawi today said he has asked the Bank Negara to investigate reports that Hong Leong Bank has barred margin-financing on a list of stocks.

Allegations that several banks were involved in the ban, in a bid to limit their risk, last week prompted a panicky sell-down on lower-line shares trading on Malaysia's bourse.

"I find it unacceptable they should resort to having that list," Abdullah, who is also Finance Minister, told a news conference.

"They should never have that list. It is very unfair to those companies put on that list, and some of those companies, I believe are good companies," he said, adding that the central Bank Negara would launch a probe into the affair.

Abdullah said a credit squeeze on margin financing by financial institutions could be one of the reasons for the bourse's downtrend.

"We cannot allow manipulation to the market," he said. "The regulators suspect there is some kind of manipulation of the market."

After news broke of Hong Leong's "ban" list, which was widely circulated among stockbrokers and banks, five institutions last Thursday jointly called for calm and said they would continue to offer facilities for share margin financing.

However, investors were not reassured after being badly spooked by the list, which covered a quarter of the counters on the bourse and even included fairly strong and reputable companies.

There were also suggestions that other banks would follow Hong Leong's lead, causing already-weak sentiment to dive even further and affect liquidity.