Good investment opportunities in Malaysia, says Templeton

by **Cals** Thu 07 Aug 2014, 00:49

Business & Markets 2014

Written by Shalini Kumar of theedgemalaysia.com

Wednesday, 06 August 2014 09:39

KUALA LUMPUR: There are plenty of investment opportunities in Malaysia over the foreseeable medium term, according to a report by Franklin Templeton Investments.

Executive chairman for the Templeton Emerging Markets group Mark Mobius (pic) said Malaysia is a beneficiary of the increasing trades among Asean countries due to its location, that is “right smack in the middle of the region”.

“They will benefit from the growth that we are seeing in Indonesia as well. And of course being adjacent to Singapore is another big benefit.

“We think from an industrial point of view, from an agricultural point of view — because of the big oil palm plantations, rubber plantations in Malaysia — you are going to find very good opportunities,” he said.

Mobius believes the trend of emerging markets outperforming developed countries would continue, noting that while there were headwinds in the region, he did not foresee any economic impact going forward.

Citing China and Thailand as examples, Mobius said each situation in Asia is unique. In China’s case, he said its gross domestic product (GDP) grew about 7% and added US$900 billion (RM2.9 trillion) to its economy last year, compared to 2010 when the GDP grew by over 10% but only added US$800 billion to its economy.

“Although there’s a deceleration in growth, the size of the economy of course has grown, and the amount of money being added to the economy each year is growing. So, we are not worried about growth in China at all,” he said.

“If you turn to Thailand, you will notice that despite all the political rhetoric and the political upheavals, the stock market continued to rise. And, when the military coup was announced, [the] stock market went up. So, we feel that the stock market in Thailand will continue to do quite well going forward,” he said.

As for the countries displaying investment opportunities in the group’s global portfolio, Mobius picked the BRIC (Brazil, Russia, India, China) countries.

“Besides those, you have quite a lot of money in Turkey, in Thailand. In our frontier funds, we have quite a lot in the Middle East, the UAE (United Arab Emirates), Nigeria, Kenya and Vietnam,” he said, adding that Thailand was also important as a growth engine.

As for Franklin Templeton’s favoured investment sectors, Mobius picked the banking, oil and gas, and consumer sectors.

He said banks have been reflecting tremendous growth witnessed in emerging markets, while the demand for fuel will continue to rise globally. In addition, per capita incomes are also moving up, hence the group’s exposure to consumer stocks.

As for risks, Mobius said the fear of volatility is the biggest risk to making investment decisions.

“People get very fearful when they see volatility and therefore they freeze. They sit on their cash for too long and, as you know what’s happening in the interest rate environment globally, it’s not very healthy.

“We feel that it’s best to get invested in good mutual funds with a good diversification, particularly in emerging markets, to preserve capital.”

This article first appeared in The Edge Financial Daily, on August 6, 2014.