What will be interesting in Invest Malaysia 2019

Today will be the first day of Invest Malaysia 2019, the largest annual capital market event for Malaysia which typically attracts around 2000 people, mostly investors, fund managers and analysts (local and foreign). People usually flock in to the first session which will be the keynote address by the prime minister, just to take as many cues and hints from his speech. It will either make or break the local market performance for the week, depending on investors’ sentiment.

As an investment professional, I attend this event almost every year and I look forward to it. Some years, many years back, I had to even stay up late at night to complete the talking points for my former MD.

This year is exceptional, people are more excited, myself included, as it will be the first time where the event is held after the new government took over last year. The new government did reach out to investors on 10 Oct last year, in a similar albeit smaller event (attracted about 1200 investors) called “Malaysia: A New Dawn”. They were hoping to be more transparent and provide more clarity but as it turned out, the investors reacted negatively. By the end of that day, KLCI fell significantly by 2.2% or 39 points as all they heard was potential introduction of “new tax”. For someone who monitors the market almost every day, 39 points in a single a day is a lot.

Now let’s see what will happen to our stock market by the end of the day. As per this year’s theme “Ambition, Purpose, Clarity”, all we want is just more clarity from the government. I think it’s important for the government to promote our country well to the foreign investors especially now that our pie is much smaller in MSCI Emerging Market (“MSCI EM”) Index after the inclusion of Chinese-listed stocks. You can’t even see our country as it falls in the “Other” category, see picture below.

msciSource: MSCI

Based on the latest MSCI EM dashboard, as at 24 Feb 2019, more than half of the top 10 constituents are held by the Chinese stocks, with Alibaba and Tencent as the 2 top stocks. Malaysia is very tiny to the eyes of foreign investors. But our risk is lower than the EM as a whole (annualized standard deviation of 12% vs. 21%) and our long-term average return is only slightly lower than EM’s return (9% vs. 10%). So on a risk-adjusted return basis, Malaysia serves as a good diversification for the foreign investors’ portfolio.

So for me, it’ll be interesting to see how government is promoting our country for foreign investors to invest in and how government is fostering the right environment to encourage local investors particularly the local institutional investors to invest outside of Malaysia. And also how are they encouraging retail investors, particularly the millennials to start investing for the future.

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