Moderate Attractiveness Driven By Low Risk In Malaysia

Malaysia

Four Pillars of GDP: Driven by private consumption

Malaysia has relatively fast GDP growth, driven mainly by private consumption and private investments. Net export was a slight drag on GDP growth in the past four quarters.

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See 2017 Hedge Fund Letters.

Malaysia is not cheap and fundamentals don’t impress

Malaysia is not cheap on PE or PB. Fundamentals aren’t impressive, slightly below Asia ex Japan, but decent dividend yield.

A. Stotz Four Elements: Malaysia’s rank relative to Asia

Overall, Malaysia appears moderately attractive in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.

Fundamentals: Unimpressive, relatively low ROE.

Valuation: Trades above Asia ex Japan on both PE and PB. Decent dividend yield.

Momentum: Moderate price momentum, slow earnings growth.

Risk: Second lowest volatility in Asia.

Health Care and the largest sector Financials were in top

Top 3 largest sectors: Financials: 23% of the market; Consumer Staples: 14%; Industrials: 12%.

Best sector & stock: Health Care: +19.1% & Top Glove Corporation Bhd: +51.8%.

Worst sector & stock: Real Estate: -0.3% & S P Setia Bhd: -3.0%.

*CE is consensus estimates.

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About the Author

Dr. Andrew Stotz, CFA
Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company providing institutional investors with ready-to- invest portfolios in Asia that aim to beat the benchmark through superior stock selection. The company also provides buy- and sell-side clients with financial models to value any company in the world and World Class Benchmarking to determine what companies are financially world class. Previously, as Head of Research at CLSA, Andrew was voted No. 1 Analyst in Thailand in the Asiamoney Brokers Polls for 2008 and 2009. He was also voted No. 1 Analyst in Thailand in the 2009 Institutional Investor magazine All-Asia Research Team Report. Andrew earned his PhD in finance at the University of Science and Technology of China in Anhui province, with a focus on answering questions raised by fund managers and analysts during his career about picking stocks and managing portfolios. In addition, Andrew has been a lecturer in finance for 22 years at various universities in Thailand. Since 2013, he has been the president of the CFA Society of Thailand. He is also the author of How to Start Building Your Wealth Investing in the Stock Market.

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