KL bourse 'rediscovered long-lost mojo'

KL bourse 'rediscovered long-lost mojo'
Published: 2010/09/28

Malaysia’s stock market has “rediscovered its long-lost mojo,” evidenced by rising trading volumes as a stronger ringgit and economy lure investors, Credit Suisse Group AG said.

“We have noticed a distinct shift in the tone of the market over the last few weeks,” according to a report by analysts led by Stephen Hagger. “Foreign funds have been attracted by a combination of a strengthening currency and economy, Malaysia being part of ‘hot’ Southeast Asia, it being under-owned, and increasingly Prime Minister Najib Razak’s economic reforms.”

Hagger, whose team was ranked second for Malaysian research in Institutional Investor’s 2010 Asian poll, favors so-called proxies for economic growth including banks, property companies, Tenaga Nasional Bhd and PLUS Expressways Bhd.

Malaysia’s government said on Sept. 21 it plans to develop a nuclear energy industry, build a mass rail network and create a shopping district to rival Singapore’s Orchard Road. The plans are part of the US$444 billion worth of potential projects it has identified to accelerate growth and transform it into a high-income nation.

The benchmark FTSE Bursa Malaysia KLCI index has surged 17 per cent since the May 26 low, surpassing levels before the start of the global financial crisis in 2008. Foreigners have become net buyers of the nation’s stocks since June, Hagger said.

‘Positive News’

“Up until recently, stocks did not react to positive news, and the market lacked a certain vibrancy,” Hagger said.

That’s changing as turnover increases, Hagger said. Trading volume on the stock market rose to 1.7 billion shares on Sept. 24, the highest level since Jan. 5, according to data compiled by Bloomberg. The daily average has risen to 843 million shares this quarter so far, from 788 million in the second quarter.

Malaysia’s economy expanded 8.9 per cent in the second quarter, close to the fastest pace in a decade, the central bank said on Aug. 18. Growth may exceed 6 per cent this year, Governor Tan Sri Dr Zeti Akhtar Aziz said then. That’s helped to boost the Malaysian ringgit by 10.8 per cent against the dollar this year, the best performance in Asia excluding Japan. -- Bloomberg

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