Malaysia: On a Hope and a Prayer

It was an uneventful year at the Malaysia bourse. Those who got into the market in April made their cash pile and exited. That money must have gone into buying houses, renovation or bringing the family abroad for a holiday.

The other die-hards stayed on, averaged down on dips and continue to see losses. So who do the authoirites blame? Yes, on the lack of foreign interest and continuous selling out by foreign investors.

So on the wing of a prayer, the fund managers and 'futurologists' of the stock market i.e. the investment banks are expecting foreign interests to return and to go after key blue-chip government-linked companies and blue-chips with regional aspirations

FOREIGN interests are expected to return to Malaysia's equity market next year due to the announcement of the country's revitalisation and further liberalisation measures.

OSK Research, in its Investment Strategy for 2010, said foreign interests are expected to go for key blue-chip government-linked companies (GLCs) and blue-chips with regional aspirations.

It said the level of foreign shareholding in the broader Malaysian market and in blue-chips has fallen from the high in early 2007.

"It is only in a few select companies such as CIMB, that we see foreign ownership rose somewhat in the second half of 2009," it said.

OSK said blue-chip GLCs that had seen a lot of foreign selling previously such as CIMB, Axiata and Tenaga Nasional, would actually be among the key beneficiaries when these foreign interests return to Malaysia in a big way.

"Blue chips with regional aspirations like Genting and Hong Leong will also attract foreign interests," it said.

OSK said its three-pronged investment strategy for next year includes buying shares in firms which are likely to benefit from growing ties between Malaysia and China, the world's new growth engine.

Another is buying laggard blue-chips, including GLCs that would benefit from an increasingly performance-based culture, it said.

"Companies with regional growth endeavours will be a bonus," it said.

Let us see whether there is any foreign action when the new morn dawns in 2010 which is just mere days away.