① Due to economic and political stability, the Malaysian market stands out from many Southeast Asian countries; ② Since this year, foreign investors have continued to inject more capital into the Malaysian bond market and stock market; ③ Analysts believe that the Malaysian ringgit is a major pillar of the excellent performance of the market. It is the best performing currency in Asia this year, and the outlook is positive.
AFP, August 22 (Editor Zhou Ziyi) Malaysia is rapidly becoming a safe haven in Southeast Asia, and foreign investors are returning to this long-overlooked market. As the country's economic growth improves, the government stabilizes, and the local currency appreciates, Malaysia is more attractive than some countries with political turmoil, making the country's market stand out from many Southeast Asian countries.
According to the data, the Malaysian economy grew at its fastest pace in 18 months in the second quarter. Since Ibrahim became prime minister in 2022, the country's stable political environment has supported Malaysia's recovery.
Foreign capital inflow
Since this year, foreign investors have continued to invest more money in the Malaysian bond market and stock market. In July of this year, they injected 1.75 billion US dollars into the Malaysian bond market, which is the highest monthly level in a year.
According to data from the Bank of Malaysia, foreign investors currently hold 20% of the country's outstanding bonds. In the future, as the Federal Reserve is about to start cutting interest rates, Malaysian bonds will become more attractive.
At the same time, the Kuala Lumpur stock market is also striving to achieve the strongest annual performance in more than 10 years.
Driven by the AI driven data center boom, Malaysia's benchmark KLCI index rose more than 12% this year, surpassing the 6% increase in the Morgan Stanley Capital International (MSCI) Southeast Asia Index.
Vikas Pershad, Asia Equities Portfolio Manager at Morning Light Investment, said that Malaysia's outstanding performance in industries such as construction, power and infrastructure provides investors with an opportunity to surpass technology stocks and consumer stocks that dominate other countries.
The Malaysian IPO market is also quite hot. Next month, 99 Speed Mart Retail Holdings, a top mini market chain, plans to go public and is expected to raise $0.509 billion.
The Malaysian currency performed well
Analysts believe that the Malaysian ringgit has always been a major pillar of the country's market's excellent performance. It is the best-performing currency in Asia so far in 2024, and the outlook is positive.
On Thursday (August 22), the ringgit hit an 18-month high against the US dollar, with a cumulative increase of more than 5% since this year; furthermore, the exchange rate of the ringgit against the US dollar rose by nearly 10% from this year's low. Earlier this year, the country's currency was close to a 26-year low.
Leonard Kwan, portfolio manager at T. Rowe Price Emerging Markets Bond Strategy, stated, “The performance of the ringgit was quite remarkable. I think most of the market returns come from money, not bonds.”
Ben Luk, a senior multi-asset strategist at State Street Global Finance, said that the strengthening of the yen in recent weeks has benefited the ringgit because investors bought “underheld and undervalued” currencies, such as ringgit, after canceling arbitrage transactions.