Emerging markets are countries which is still growing pretty fast. For example, ASEAN countries except for Singapore. Advanced countries would be countries that has grown so much many years back that these days, their growth are usually very low single digits, say 1%. In fact, it’s a cause for celebration if they do reach 2 percent GDP growth per year. Recently, the U.S had a GDP growth of 1.9 percent in Q2 2016. As for Malaysia, even with a GDP growth of 4.5 percent as predicted by International Monetary Funds, it’s considered ‘nothing special.’ Most of my Malaysian friends continue to have jobs and continue to complain about how bad we really are despite the whole world which is really in a bad shape currently. Well, recent few weeks have been pretty encouraging. It seems that Bursa Malaysia is back in favour. Our Ringgit has been one of the best performers in Asia for 2017. (We were one of the worst in 2016….) There’s a long article about why Emerging Markets are becoming favourable to investors. Read it in TheStar here.
The article shared a few key points as follows:
1) Morgan Stanley initiated Malaysia’s stock market at “overweight”. Key reasons include the boost from the upcoming general election and the increased spending on infrastructure. (Notice all the LRTs and MRTs that is being built currently? As well as that highly shared East Coast Rail Line? Yea, generally these are good for the economy. )
2) Private investments funded by China under the “One Belt, One Road” initiative will drive investments. Within 2016, China and Hong Kong contributed 40% to Malaysia’s foreign direct investment. (I love China and I like Hong Kong. I think they are both making a good decision if they invest in Malaysia as a gateway to ASEAN.)
3) Corporate earnings will improve after three years of decline. Morgan Stanely estimated that profit grwoth would be up 8-9 percent in 2017 – 2018. (Time to buy good stocks with a good business I guess. Buy and keep lah. Since an investment bank is saying that the profits are going to go up)
Seriously, it’s about time people invest and not buy due to some sentiments. US$ has risen against the world, perhaps too much too soon. Let it’s economy grow, a stronger currency is not a great help if they are thinking about getting more of their companies to build within and export to the world. Seriously, it’s double whammy if they were to do so. Yet, they are seen as less patriotic if they refused to. Well, can’t win everything right. Ringgit is at US$1 to RM4.34 level today (27th April 2017). This is a level that I have not seen for quite some time. I repeat BNM’s stance. Ringgit should just be allowed to be stable and used for investment purposes. Happy investing everyone.
written on 27 April 2017
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