Malaysia To Capitalise On Domestic Catalysts, Growth At 4-5 Percent

KUALA LUMPUR, March 1 (Bernama) -- Malaysia is expected to capitalise on a resilient stock market, robust capital market activities, healthy foreign reserves and fundamentally strong corporate sector, to record a decent growth between four and five per cent this year, says Eastspring Investments Bhd. Chief Investment Officer, Equities, Yvonne Tan said the country's fundamentals remained broadly intact despite the prevailing global economic uncertainties. She said the local bourse is expected to be resilient due to ample liquidity from local institutional investors and low foreign participation. In a media briefing on regional and Malaysian Economic Outlook 2012, she said the local bourse's defensive nature was attributable to high liquidity in the financial system and one of foreign fund's favourites during uncertain times. In January, local and foreign institutional participation on Bursa Malaysia (Malaysia Exchange) accounts for 36.51 per cent and 21.89 per cent, respectively. Tan highlighted that the low foreign shareholdings had been on a flat trend of about 22 per cent since December 2008. She said key initial public offerings in the pipeline this year, such as Felda Global Venture and Parkway Pantai Ltd, and the expected mergers and acquisitions involving big players, would spur interest for a robust capital market this year. "The encouraging FDI (foreign direct investment) inflows and the healthy foreign reserves will lend support towards a positive growth," she added. She said the country's healthy foreign reserves, which stood at US$134.1 billion as of end-January, would act as a buffer against potential economic shocks. "The foreign reserves are sufficient to finance 9.6 months of retained imports," she stated. Meanwhile, the strong fundamentals in the corporate sector, coupled with the roll-out of the Economic Transformation Programme projects, mainly from civil engineering activities in construction sector, will also contribute to a decent growth this year. However, Tan said the ongoing wariness over eurozone debt crisis, a sharper-than-expected decline in China's growth and domestic political risks arising from upcoming general election, were major concerns in the Malaysian market. The uncertainties and market volatility would likely persist, but nonetheless such occurrence would also create investment opportunities over the long run. -- BERNAMA .