Malaysia’s stockmarket is “sliding down a slippery slope, seemingly unable to break its fall”, says a note from PublicInvest Research. An explosion of Covid-19 cases, strict lockdowns and political gridlock have made this a difficult year. On Monday Prime Minister Muhyiddin Yassin resigned, ending a contentious 17-month spell in power. Muhyiddin “was aligned with a scandal-tainted governing coalition”, says Daniel Victor in The New York Times. “Calls for his resignation gathered force as the country issued multiple lockdown orders… and endured widespread hunger.”
Malaysia’s monarch has been consulting political parties on who to appoint in his place. Malaysia has been living under strict lockdown rules since June. The contagious Delta variant has spread regardless, with daily cases close to record highs.
Export-dependent growth
GDP is highly dependent on export-oriented manufacturing and inward investment from abroad, says Shankaran Nambiar in Nikkei Asia. Exports of goods and services account for 61.5% of GDP (the UK figure is 27.4%).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lockdowns have left local factories struggling to function. Foreign trade associations have complained bitterly about the rules. Global manufacturers cannot tolerate disruption for long: problems in one place can bring entire multinational supply chains to a grinding halt. If they leave then it will hit “at the heart of the Malaysian development model”. For all their talk of moving out of “production and packaging” and into higher-value activities, Malaysia’s politicians have failed to make the investments in education that would actually make that possible.
Lockdowns aren’t forever, say Chua Han Teng and Philip Wee of DBS Bank. The country has done a decent job at getting vaccine jabs into arms. Malaysia looks the second-most likely country in the region to “exceed 80% full vaccination rate” by October, behind only Singapore. That should enable a domestic reopening later in the year and a big boom from pent-up demand. In the meantime, strong global goods demand is keeping exports buoyant.
The vaccination campaign should have calmed traders’ Covid-19 worries, says Amy Chew in The South China Morning Post. The fact that stocks are still retreating suggests politics is the key problem. Unable to predict future government policies, investors are pulling out. Foreign investors sold a net 5.3 billion ringgit (US$1.25bn) of stocks in the first seven months 2021, according to data from PublicInvest. UOB Global Economics & Markets Research reports that 20.2% of Malaysian equities are owned by foreign investors, “an all-time low”. Strategists see better opportunities elsewhere in the region in countries such as Vietnam and Indonesia.
-
Where are ISA savers and investors putting their money?With less than three months until the end of the tax year, where are ISA savers and investors putting their money? We look at the latest ISA trends.
-
More than £53 billion held in fixed-rate cash ISAs will mature by April - where should savers move their money?If your fixed-rate cash ISA is maturing soon, we look at the options available to you
-
What investors can expect from stocks and the economy in 2025There are reasons for investors to be hopeful about 2025, with slowing interest rates and moderating oil prices. But trouble may be brewing in bond markets
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
How did emerging markets perform in 2024?Emerging markets underperformed their developed counterparts in 2024, but there are signs of recovery. We look at the biggest winners and losers of 2024, and the key trends shaping these markets
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
South Korean won hits 15-year low – what it means for 'Korea discount'After Yoon Suk Yeol's failure to declare martial law, South Korean markets are reeling, with the weakest won since 2009. Will this worsen the Korea discount?
