Report: Global funds bypassing Malaysia as investors lose patience with Pakatan

Malaysia’s stock market has seen money going out in 10 out of the past 12 months while the ringgit is performing weaker than its regional counterparts ― but portfolio managers reportedly do not see any recovery on the near horizon. — Bernama pic
Malaysia’s stock market has seen money going out in 10 out of the past 12 months while the ringgit is performing weaker than its regional counterparts ― but portfolio managers reportedly do not see any recovery on the near horizon. — Bernama pic

KUALA LUMPUR, May 13 — Global investors are putting their money someplace else but Malaysia as they lose patience with the pace of reforms promised Pakatan Harapan following the pact’s historic election victory last year, Bloomberg reported.

The financial news outlet said Malaysia’s stock market has seen money going out in 10 out of the past 12 months while the ringgit is performing weaker than its regional counterparts ― but portfolio managers reportedly do not see any recovery on the near horizon.

Few expect a recovery anytime soon, such as manager Tim Love who handles US$1 billion (RM4.16 billion) for a GAM Holding AG's unit.

“I do not think I need to rush into Malaysia at the moment,” portfolio manager Tim Love, who handles US$1 billion (RM4.16 billion) of emerging-markets equities in London, was reported saying.

“Even with the valuation attraction which is now definitely coming up clearly, I don’t think that the outlook is clear enough.”

This comes as Bloomberg reported that the FTSE-Bursa Malaysia Kuala Lumpur Composite Index is now the world’s worst-performing major equity market, dropping by more than four per cent this year.

In addition, some corporate firms have seen their profits dropping from the cancellation of several major infrastructure projects.

Meanwhile, Malaysian bond is risking getting taken off from FTSE Russell’s World Government Bond Index.

“We’ve been neutral Malaysian government bonds for a while now,” another London-based portfolio manager, Delphine Arrighi, was quoted saying.

Despite the negative outlook, Bloomberg also reported that the weakness would present a buying opportunity for some.

In March, Bank Negara Malaysia cut its 2019 economic growth forecast between 4.3 and 4.8 per cent from 4.9 per cent, on expectations of a significant drop in export expansion due to slowing global growth and the US-China trade war.

Last week, it also became the first central bank in the region to cut its benchmark interest rate, in a move to support the country’s economy.

Related Articles