Oh, this is truly sad.
To be shunned by the majority of the investors. What has happened to Malaysia that it has come to this?
A Bank of America Merrill Lynch report has reported that Malaysia is now the “least favoured market” in Asia Pacific for investors after nearly doubling its underweight rating only last month.
The country slipped two spots — from 10th place to dead last — in the investment bank’s latest Fund Managers Survey, even as the Najib administration in the process of unveiling ambitious economic reforms meant to boost investor confidence.
This appears to be the latest indictment of Malaysia’s inability to compete with rival regional markets. In the past decade, the once roaring Asian Tiger has seen its dominant position as an investment destination in Southeast Asia crumble even as neighbouring countries push to the fore.
A survey last week by the World Economic Forum (WEF) of 139 nations showed that Malaysia had slipped two places in global competitiveness rankings to 26th in the past year, while Indonesia surged 10 places to 44th.
The government is nonetheless optimistic that reforms under Prime Minister Datuk Seri Najib Razak’s New Economic Model (NEM) — details of which will be revealed next month — will revitalise the economy and help Malaysia achieve developed nation status by 2020.
However, Najib’s economic transformation is hinged on the government’s ability to galvanise RM2.2 trillion in investments over the next 10 years — 92 per cent of which is to come from the private sector — and it remains to be seen if the prime minister can overcome investors’ muted response to his plans so far.
Najib also faces stiff opposition from Malay rights groups who feel such reforms threaten what they perceive to be Malay “special rights”, and seems unable to push them through without significant compromise.
Elsewhere in the region, China remained the favourite market by far despite an uncertain global outlook. A net 11 per cent of investors expect China’s economy to strengthen, up from -39 per cent in July, according to Merrill Lynch.
Indonesia, slightly underweight last month, jumped to second place on an overweight call, edging out Hong Kong in the process. New Zealand, Taiwan, South Korea and India remained neutral.
Emerging markets outperformed developed markets this year and remain the preferred destination for investors, although emerging market allocations have been trimmed due to growth uncertainty and risk aversion.
Brazil and Russia continue to be favourites, but appetite for Turkey has fallen in the past two months.
The consumer discretionary sector is still the most popular among emerging market investors, followed by industrials, telecoms and financials.
Defensive sectors like utilities, staples and healthcare remain least favoured but have reduced their underweight positions from last month.
