What keeps foreigners away from Malaysian stocks?
Despite efforts to liberalize and open up the Malaysian stock exchange (Bursa Malaysia), its shares remain under-held by foreign and even local investors. Competition from other ‘emerging’ markets and misperceptions about the Bursa’s regulations on outside investment may be part of the problem, though some question whether the problem exists.
Of the RM20.8 billion (US6.5bn) traded on the Bursa Malaysia last month, only 28.21% was the result of overseas activity, 27.77% was institutional and only 0.44% was retail. Local retail activity made up 18.50% of the total. Bursa Malaysia Bhd CEO Yusli Mohamed Yusoff said that after a series of roadshows conducted with foreign investors and fund managers, it was apparent that outsiders still believed Malaysia had barriers like capital controls, foreign ownership restriction and currency pegging, despite these being lifted years ago.
Malaysia’s own high net worth investors had begun looking to other markets recently, suggesting there might be other reasons for lack of interest in local stocks.
Others, such as Aberdeen Asset Management’s head of equities Abdul Jalil Rasheed, suggested Malaysia was a different kind of market to others on the ‘emerging’ radar. It’s reputation for being somewhat dull was a sign investors considered it a safe haven compared to more exciting markets in China and Indonesia. He pointed out that investment in Malaysia’s market grew when others like it were crashing.
source & article: The Edge Malaysia
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