Malaysia's Run Looks Far From Over by William J. Holstein and Assif Shameen
Summary: A new leader, loosening government financial controls, higher commodity prices, strong GDP growth along with political trouble in Thailand and frothy Chinese stocks have made Malaysia an attractive market. Malaysia's Bursa is up 26% in dollar terms, or 13% in 2006 and 20% in 2007 without the currency effect. Hedge funds betting on weaker dollars and stronger Asian currencies believe Kuala Lumpur's potential lies ahead. U.S. investors can buy Barclays' iShares MSCI Malaysia Index (NYSEARCA:EWM) and the soon-to-be-accessible Tan's Pheim Asset Management, through Merrill Lynch. Local plays include Sime Darby, a Bear Stearns Overweight pick, a play on Malaysia's bountiful palm oil (a biofuel alternative to Europe's ethanol-poor landscape). Bear Stearns also likes Gamuda, a toll road and tunnel builder. Construction firm IJM and pipeline coating maker Wah Seong are globally active companies. National utility Tenaga Nasonal and Malayan Banking (OTCPK:MLYBY) benefit from easing foreign investment rules and corollary foreign capital inflow. Barron's also likes international gaming company Genting, but cautions against national automaker Proton Holdings.
Related Links: iShares Asia Region ETFs Weekly and YTD Returns • International ETFs Continue To Surge • International ETFs: Hong Kong, Malaysia, Singapore Overbought; Canada, India, S. Korea Oversold • New Development Plans Send Malaysia's ETF Soaring
EWM 1-yr. chart: