Malaysia had the worst net flow of
foreign funds on a year-to-date (YTD) basis in ASEAN, up to end of first week
of May (The Edge Financial Daily, May 14, 2019). The net outflow totalled
USD801.3 million for Malaysia and USD562.8 million for Thailand.
Why? For Malaysia, it is the OPR
reduction to 3.0%; lack of clarity of Government policies; attractiveness of
other foreign markets like India or Indonesia. This is in addition to
unattractive valuations and corporate earnings growth. There is also the
possibility of exclusion under the FTSE Russell index. Some say fear is
“over-hyped”.
The positive attributes include the Government
is restoring some key mega projects like ECRL and Bandar Malaysia. This amounts
to RM200 billion. The spill over/multiplier effects will bear fruit once the
projects re-commence. Oil price exceeds
target and liquidity is ample. But business sentiment and confidence needs an
urgent revival. So when will markets improve? The consensus by some learned
economists/commentators is by the third quarter, 2019. In which case FBM KLCI
will surge to 1,800 points or higher. With net inflow, the exchange rate may
also improve to RM4:USD 1 or better! (Figures or forecast quoted here are purely general commentary only and should not be regarded as
advice for any purchase or sale)
Reference:
The Edge
Financial Daily, May 14, 2019
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