Malaysia ranked in top spot by Morgan Stanley analysts for third quarter investment

PETALING JAYA: The local bourse may see renewed interest among
investors as robust domestic demand and government spending on
infrastructure drive earnings among companies.
Morgan Stanley
Research analysts said in a recent report that the country was ranked
at the top spot for the third quarter based on valuation,
profitability, earnings and performance.
“Malaysia's attractive
ranking is driven by a combination of attractive dividend yields, under
ownership levels, improvement profitability and relatively strong
performance momentum,” they said.
They added that the country's
current dividend yield of 3% was higher than its three-year average.
They said that according to EPFR Global, a funds flow and asset
allocation data provider, investors continue to position the Malaysian
stock market 210 basis points underweight compared to the MSCI Asia
ex-Japan benchmark.

[You must be registered and logged in to see this image.] They
said profitability in terms of return-on-equity basis has improved to
12.7%, higher than the three-year average. “One quarter relative price
performance for MSCI Malaysia has also been strong as it was the second
best performing market in Asean,” they said.
While MSCI
South-East Asia consensus earnings growth estimates had been revised
down by 23 basis points last week, MSCI Malaysia earnings were revised
up by 54 basis points.
“MSCI Thailand estimates was revised down
the most, by 41 basis points, followed by MSCI Singapore 40 basis
points, MSCI Indonesia 10 basis points and MSCI Philippines 4 basis
points,” they said.
They said consensus growth estimates for
2012 were 14.4% for Malaysia, Indonesia (9.3%), Philippines (8%),
Singapore (3.1%) and Thailand (14.2%).
On a year-to-date basis
and relative to the performance of MSCI Asia ex-Japan, MSCI Malaysia
declined 1.5%, MSCI Indonesia contracted 7.2%, MSCI Thailand gained
9.2%, MSCI Singapore rose 12.4% and MSCI Philippines jumped 14.7%.
On a sectoral basis, Malaysian utilities was revised up 94 basis points while industrials was revised down 35 basis points.
Meanwhile,
The Institute of Chartered Accountants in England and Wales said in a
report that although growth prospects for Asean had fallen
substantially in line with the deteriorating conditions around the
world, “Malaysia is still going fairly strong as domestic demand
remains relatively buoyant.”
It said that like other countries
such as Indonesia and the Philippines, the basic story of rising middle
class incomes in Malaysia persisted despite diminished prospects for
investments due to lower profits for exporters.
It forecasts
growth to slow down to an annual average of 3.8% in the second half
(after growing 5.1% in the first half) due to external headwinds.
“Elections
this year or next year bear some political risk, but in the event of a
peaceful outcome, growth should rise by 3.5% in 2013. A recovery of its
trading partners should see the country's gross domestic product rise
by 4% in 2014,” it added.