Malaysia losing its attractiveness to investors, local and foreign

Malaysia has been crowned as the world’s worst major stock market ytd by investors. In fact they think that our market is really really boring, nothing exciting is expected to happen at least in the next 1-2 years depending on how pessimistic you are.

Last month, I mentioned that Malaysia poised to lose its home in MSCI EM index if we keep losing our competitive edge, as a result of inclusion of China A-shares which will just dwarf small countries like us. Read here.

Last week, the biggest sovereign wealth fund, Norway, announced that they are going to cut emerging market bonds from their fixed income portfolio and that includes Malaysia. Read here.

Earlier today, FTSE Russell announced that Malaysia is included in the watchlist of countries that may be dropped from FTSE World Government Bond Index, stemming from concerns on market liquidity, country’s fundamentals and market accessibility. This news is huge, this is a flagship index. Read here and here. Following the news, KLCI tanked to a 3-year low, a drop of 14% from a record achieved in May 2018. Last year, we emerged as the worst performing index in Asia. As written in this article, we keep missing out on global rally. Since start of the year, most major indices are in positive territory.

To the eyes of large investors (by large I mean those invested in large caps stocks such as those in KLCI), this is nothing new. There is no certainty ever since the news about our former PM’s scandal got surfaced, then there was little hope after the new government took over, but after almost one year, we are seen as still busy cleaning up the mess and people keep talking about it than doing real work (I’m talking about the percentage here, the majority).

Now the question is, what should we do? How should we be part of the solution?

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