Malaysia Takes a Back Seat to Asia

Sep.22.10 | About: iShares MSCI (EWM)

Despite Malaysia’s proposed economic reforms, foreign investors are shunning the country’s markets, opting for better investment opportunities in the region. Nevertheless, the Malaysia country-related ETF is trading favorably on higher growth in the emerging markets.

A recent Bank of America Merrill Lynch report dubbed Malaysia the “least-favored market” in the Asia Pacific after the country dropped from 10th to last in the latest Fund Mangers Survey, reports Yong Hong Chieh for My Sinchew. The United Nations calculates that overseas investment dropped 81% last year.

Malaysia isn’t taking this lying down, though:

  • The government stated that the country’s private sector projects, worth $444 billion, can fill in for the lack of investment and bring the country to developed-nation status by 2020, writes Barry Porter for BusinessWeek.
  • Through the New Economic Model (NEM), the government hopes to increase per capita income to $15,000, which meets the World Bank’s definition of high-income nation. To meet this goal, the country will have to grow by an average 6% annually in the next five years.
  • Malaysia will add an additional 3.3 million jobs, with 60% in the medium- or high-income categories, to help the country reach high-income nation status by 2020, according to My Sinchew.
  • iShares MSCI Malaysia Index Fund (NYSEArca: EWM) has hardly suffered; it’s up 25.2% in the last year. Over the last month, it’s up 6.9%.

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Max Chen contributed to this article.

Disclosure: None