Revisiting Malaysia
Matthews Asia
By Lydia So
July 27, 2012
In the market turmoil of recent months, Malaysia’s equity market has held up comparatively better than some of its Asian counterparts. The FTSE Bursa Malaysia KLCI Index was up 1.4% during the second quarter in local currency terms. During the previous quarter, Malaysia had seen several large initial public offerings that raised capital totaling more than US$3.3 billion. While in Kuala Lumpur last month, I got a general sense from my conversations with management teams that domestic demand was still quite healthy despite the global economic slowdown. Construction activity, including civil works and residential property redevelopments, appeared buoyant. Financial firms, such as insurance and credit card companies, have seen recent job creation and investment activity spurring growth for their businesses.
Two years ago, the Malaysian government’s Economic Transformation Program pledged to transform the country into a “high-income nation” by 2020 (high income being US$15,000 per capita). Twelve key segments ranging from oil and gas to tourism and health care were identified as growth drivers for the country. One that garnered much attention was mass transit as Malaysia has lagged in public transportation infrastructure. So far this year, the government has awarded tenders for various components of the urban mass rapid transit system, a project to transform public transportation in the Greater Kuala Lumpur area. Some pre-construction work commenced this summer, and the favorable economic impact has trickled into the private sector.
As encouraged as I was to witness the recent developments that have come from government-led initiatives, I was also excited to see dynamic opportunities being discovered in entrepreneurial companies. Some Malaysian consumer staples and financial companies have made inroads into such frontier economies as Vietnam, expanding their sources of revenue outside of its relatively small domestic market. One small food and beverage company that has built a successful home-grown brand over the years is now eyeing not only the Southeast Asian market but also China as a growth market. In recent years the firm has discovered that among their new customers were a growing number of Chinese tourists who patronized their stores in Malaysia. Their long-term success in newer markets remains to be seen; however, we are seeing more Malaysian companies becoming increasingly ambitious in reaching out for a greater share of Asia’s economic pie.
he subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews does not accept any liability for losses either direct or consequential caused by the use of this information.
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