Malaysian ‘super-cycle’ to bolster growth

Malaysia is entering a “super- cycle” of investments that will bolster economic growth to as much as 7 percent per annum for the next three years, according to Credit Suisse Group AG.

The growth estimates are higher than the government’s forecast of 5 percent to 6 percent expansion this year. Growth will be spurred by a mass rail network, rising investments from Singapore and wealth from commodities, Stephen Hagger, a Kuala Lumpur-based analyst at Credit Suisse, wrote in a report today.

“Malaysia’s economic transformation plan will succeed where others have failed due to its structure, which is private- sector driven, but with oversight” by Prime Minister Najib Razak, Hagger said. His team was ranked first for Malaysian research in Institutional Investor’s 2011 Asian poll.

Najib’s government unveiled an economic transformation program in September aimed at attracting investment. The plan includes US$444 billion of programs this decade ranging from mass rail to nuclear power, led by private and government-linked companies. The government is also pushing for share sales by state-owned companies to help double the size of its capital markets by the end of the decade.

The benchmark FTSE Bursa Malaysia KLCI Index has rallied 2.9 per cent this year, outpacing the 3 percent drop in the MSCI Emerging Markets Index. The gauge gained 0.1 per cent to 1,563.01 as of 12:01 p.m. local time in Kuala Lumpur, nearing its record close of 1,574.49 on Jan. 17.

The stock market was lifted to “advanced emerging market” status from “secondary emerging market status” in the FTSE Global Equity Index Series, Bursa Malaysia Bhd said in a statement yesterday.

“Malaysia is famous for its plans, but infamous for its lack of execution,” Hagger said. “However, we believe the transformation plan is structured in such a way that a significant part of it will succeed.” - Bloomberg