Investor confidence in Malaysia falling

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Malaysia marketInvestors have begun to shy away from Malaysia as rising inflation and a broad retreat from developing countries hurts one of Asia’s most favoured markets, the Wall Street Journal reported.

The selloff has pushed Malaysia’s currency down to it weakest in more than three years this week, yields on benchmark government debt are at the highest since 2010 and the stock market is down 4.5 per cent from a record high early in December 2013.

Sentiment has turned as investors take stock of the large proportion of Malaysian government debt owned by foreign funds — over 40 per cent, the highest ratio in Asia — that leaves the country vulnerable if global fund managers pull back further as jitters linger over emerging markets.

Woes are mounting at home too with prices rising at their fastest since 2011, leaving Malaysians struggling under high costs as the government ends subsidies from fuel to sugar as it tries to curb spending and plug its wide budget deficit.

The slide in Malaysia’s markets means it joins other rocky markets in Southeast Asia after years of heady gains. Thailand continues to struggle with a political deadlock and anti-government protests, the Philippines is writhing in the aftermath of a typhoon that killed thousands and has now pushed up inflation, and factories and businesses have been crippled by floods in Indonesia.

Malaysia’s ringgit is especially bearing the brunt, down 2 per cent this year and the worst performer in Asia after the South Korean won and the Philippine peso. Foreign ownership of bonds has declined to 41.1 per cent from 43.2 per cent at the end of the third quarter last year, according to central bank data.

Moreover, Malaysia is currently struggling with rising social and racial tensions that emerged when the government strengthened its pro-Muslim policy. The latest incident, a bomb explosion at a church in Penang, could be a sign that things might turn worse.

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Reading Time: 2 minutes

Investors have begun to shy away from Malaysia as rising inflation and a broad retreat from developing countries hurts one of Asia’s most favoured markets, the Wall Street Journal reported.

Reading Time: 2 minutes

Malaysia marketInvestors have begun to shy away from Malaysia as rising inflation and a broad retreat from developing countries hurts one of Asia’s most favoured markets, the Wall Street Journal reported.

The selloff has pushed Malaysia’s currency down to it weakest in more than three years this week, yields on benchmark government debt are at the highest since 2010 and the stock market is down 4.5 per cent from a record high early in December 2013.

Sentiment has turned as investors take stock of the large proportion of Malaysian government debt owned by foreign funds — over 40 per cent, the highest ratio in Asia — that leaves the country vulnerable if global fund managers pull back further as jitters linger over emerging markets.

Woes are mounting at home too with prices rising at their fastest since 2011, leaving Malaysians struggling under high costs as the government ends subsidies from fuel to sugar as it tries to curb spending and plug its wide budget deficit.

The slide in Malaysia’s markets means it joins other rocky markets in Southeast Asia after years of heady gains. Thailand continues to struggle with a political deadlock and anti-government protests, the Philippines is writhing in the aftermath of a typhoon that killed thousands and has now pushed up inflation, and factories and businesses have been crippled by floods in Indonesia.

Malaysia’s ringgit is especially bearing the brunt, down 2 per cent this year and the worst performer in Asia after the South Korean won and the Philippine peso. Foreign ownership of bonds has declined to 41.1 per cent from 43.2 per cent at the end of the third quarter last year, according to central bank data.

Moreover, Malaysia is currently struggling with rising social and racial tensions that emerged when the government strengthened its pro-Muslim policy. The latest incident, a bomb explosion at a church in Penang, could be a sign that things might turn worse.

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