CLSA’s Wood overweight on Malaysia
Written by Madiha Fuad of theedgemalaysia.com
Monday, 24 September 2012 09:05

KUALA LUMPUR: CLSA equity strategist Christopher Wood is “overweight” on Malaysia because of the strong economic growth this year.

He said the economic growth coupled with healthy loan growth in the banking system are the more salient points that enhanced his optimism on the domestic market.

“My ‘overweight’ of Malaysia is technically because we are expecting a positive ending for the third quarter,” he said during the CLSA Global and Asian Investment Strategy Talk last Thursday.

Wood said the Malaysian economy has outperformed in various aspects such as loan growth, inward and outward foreign direct investment (FDI) flows as well as having a real effective exchange rate.

“I think the fundamentals are positive for Malaysia and many other Asian economies since they have extremely healthy loan growth,” he said.

Malaysia registered a second quarter (2Q) GDP growth of 5.4%, which is above market consensus. Its 1Q growth was also revised up to 4.9% from 4.7% announced earlier.

In his presentation, Wood said Malaysia’s bank loan growth has increased by 13% year-on-year while the banking system’s non-performing loan (NPL) ratio fell to a record low of 1.49% of total loans in July.

Nevertheless, despite the slight increase in foreign ownership of Malaysian stocks from July 2010 to July 2012, Wood said it is still far from the peak of 27.5% reached in 2007.

He finds Malaysia’s FDI flow unpredictable due to the sudden decrease in foreign investments in the first half of this year.

Malaysia’s FDI inflows recorded a sudden drop to US$4 billion (RM12.2 billion) in the first half of 2012 from US$12 billion in 2011.

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