KUALA LUMPUR (July 3): Malaysian securities have the potential to offer investors capital growth amid global market corrections and volatility, especially with better prospects seen for the country in the second half of the year, said UOB Asset Management (Malaysia) Bhd (UOBAM Malaysia).
Speaking to reporters at the launch of its United Malaysia Fund here today, chief investment officer Francis Eng said Malaysia stacks up on a risk adjusted basis and could benefit from portfolio flows, looking for a defensive market amidst external risks.
“Malaysia’s market valuation is not demanding.
“Malaysia is not that expensive, and in fact, arguably slightly cheap on a price-to book basis, compared to historical. Our market typically trades at a premium to Asian markets, and it has now fallen below mean,” he said.
Eng said while the Malaysian market has been lacklustre in the past 12 months with the unprecedented change of government, the market has adjusted to the change and more improvements are seen forthcoming in the second half of the year.
“We think policy clarity is improving, especially in recent months, and we expect that momentum to continue.
“Economic growth numbers are encouraging as [private] consumption — being one of the main pillars of economic growth — is holding up, and the FDI numbers are seen to translate into growth in the medium- to longer term for the country.
“We think that investors should still brace for volatility [but] in this kind of environment, a defensive stock market, like Malaysia, will be attractive,” he added.
According to UOBAM Malaysia chief executive officer Lim Suet Ling, who was also present at the launch, the United Malaysia Fund, with an initial minimum investment of RM1,000, provides investors with the opportunity to tap into Malaysia’s growth, amid rising concerns of a global economic slowdown.
The Fund aims to provide investors with income and capital appreciation by investing in a diversified portfolio of equities, equity-related securities, fixed income securities, money market instruments and placement of deposits with financial institutions.
Targeted sectors include consumer-related due to its predictive growth; government-linked companies and construction on the back of improved newsflow; as well as manufacturing as the industry could benefit from trade diversions resulted from the US-China tensions.