M'sia has biggest fund outflow among emerging Asian equity markets


Malaysia’s stock market has not managed to shake off its poor performance as one of Asia’s worst-performing major stock market following Pakatan Harapan’s victory in the 14th general election last year.

A recent report from Bloomberg highlighted the situation where few foreign investors have been willing to enter the local bourse despite Malaysian stocks getting cheaper by the day.

On a year-to-date basis, global funds have yanked more than RM8 billion from local equities, representing the biggest outflow among emerging Asian equity markets.

Bloomberg data also showed that the FBM KLCI Index’s 12-month forward earnings estimate fell more than 12 percent since GE14.

Investor sentiment was rattled in April this year when FTSE Russell placed Malaysia on its watch list for a potential downgrade which would see the country falling out of the global bond market index.

According to Bloomberg, the shelving and/or downgrading of several mega-infrastructure projects and a cut in public spending had resulted in lower earnings estimates which in turn affected investor sentiment.

The current political turmoil engulfing the Harapan parties, including the question of Prime Minister Dr Mahathir Mohamad’s succession, has overshadowed and slowed efforts to improve the market and economy, it said

Investors are also monitoring the outcome of government reforms in the electricity, telecommunication and construction sectors.

On a positive note, the government seems to have taken appropriate measures to attract investors through various incentives and tax breaks as announced in its Budget 2020, it added.