Malaysia ETF: Sustainable Growth?

Dec.27.10 | About: iShares MSCI (EWM)

Malaysia’s economy experienced a burst of activity in the first half of the year, but it has cooled down since. Still, the Malaysia-related ETF may continue to see a growth trend.

According to Bernama, Malaysia’s economy is expected to expand by 5.3% in 2010 on increased domestic spending, lower budget deficit, structural reforms, and domestic business and foreign direct investment.

Property consults opine that the property market will continue to grow, without worries of a possible bubble, writes Christine Lim for Bernama.

Executive chairman of Rahim & Co Chartered Surveyors Sdn Bhd, Datuk Abdul Rahim Rahman, stated that increased residential transactions “is expected to continue next year as the Malaysian economy is improving.” Governmental initiatives and further urbanization will also aid the property sector, adds Rahman.

The Malaysian economy was fueled by export growth, more notably from the electronics sector, for the first half of 2010, but external demand has slowed since, report Donna Jeremiah and Carrie Low for PRLog. Malaysia’s electronics exports are expected to make up 38% to 40% of overall exports for the first quarter of 2011.

Frost & Sullivan’s Asia Pacific Automation & Electronics Program Manager Tim Chuah remarks that “the growth of the electronics sector is fueled by the pick up in external demand for semiconductors, consumer electronic equipments, computers and related equipments and other electronic components and devices.” Additionally, Malaysia is also becoming a major locale for leading solar cell manufacturers.

iShares MSCI Malaysia Index Fund (NYSEArca: EWM)

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Disclosure: Tom Lydon’s clients own EWM.

Max Chen contributed to this article.