KUALA LUMPUR: Malaysia will need to see a “big step down” in oil prices and huge foreign fund outflows before they become a cause for concern, said Amundi Asset Management.

“We have been seeing some foreign fund outflows, pull out of the country, but these are not major outflows. We will have to see if it gets worse and also a big step down in oil prices in order to be really concerned,” said its director of investment, Leon Goldfeld, at Amundi’s first-quarter market outlook conference call yesterday.

“Although we do not see much of an upside for Malaysia this year, there is no significant vulnerability in the macro level [for now],” he said.

Goldfeld described the weakness of the ringgit as a vulnerable factor, and the outflow of foreign funds as an important risk factor.

The ringgit weakened to RM3.5975 against the US dollar yesterday.

Reuters reported that the ringgit hit a 5½-year low against the greenback yesterday, dented by a renewed slide in oil prices, underperforming on a day when most other Asian currencies were steady to firmer.

Goldfeld warned that where downside risks are concerned, Malaysia faces greater risk compared with the rest of the region.

“Along with falling oil prices is the fall in liquefied natural gas, soft commodities and palm oil prices. The recent floods have also affected palm oil production in Malaysia,” he said.

However, the asset management company expects Malaysia’s gross domestic product growth to be “not too dissimilar” from 2014’s and for the budgetary position to remain stable.

“At the heart of it, we don’t think that Malaysia will transform drama tically compared with last year,” said Goldfeld.

On the impact of the goods and services tax (GST) to be implemented in April this year, he sees the consumption tax as posing some headwinds in the short term before consumer spending bounces back.

“There are some downside risks in the GST in terms of growth, but our view is that it shouldn’t be that dramatic,” he added.

He expects Asian equities to deliver a return of around 10% in 2015 — which is about 5% faster than 2014’s — due to an improvement in operating margins.

“A combination of moderate earnings growth, supportive valuations and dividend yields will all contribute positively, offsetting a headwind of modestly depreciating Asian currencies,” added Goldfeld.

This article first appeared in The Edge Financial Daily, on January 14, 2015.