“Our gross domestic product growth is one of the best in six years.”

DATUK DR NAZRI KHAN ADAM KHAN, Affin Hwang Investment Bank vice-president and head of retail research

KUALA LUMPUR: Malaysia is among the Asean countries that offer the highest average dividend yield, making it an attractive investment destination for foreign investors, despite the volatility in the economic environment.

Affin Hwang Investment Bank vice-president and head of retail research Datuk Dr Nazri Khan Adam Khan said the FTSE Bursa Malaysia KLCI (FBM KLCI) had trended higher than the 1,800 psychological level and this could help in the country’s economic recovery.

He said Malaysia’s export growth had topped consensus expectations, increasing at a stronger pace than estimated.

“Most of the data are very strong. Our gross domestic product (GDP) growth is one of the best in six years,” he told NST Business yesterday.

Nazri said the World Bank had recently revised up the country’s GDP growth forecast to 5.2 per cent, while the ringgit had been strengthening and was expected to reach 4.15 against the US dollar by year-end.

“I see no reason why foreign investors should slow down (their investment). In fact foreign ownership starts to increase at a strong rate, based on Bursa Malaysia data,” he said.

Inter-Pacific Research Sdn Bhd head of research Pong Teng Siew said there was always time when foreign investors would “buy more” or “sell more” as it was part of a trading cycle.

“Foreign funds continuously evaluate their position. They never have views to hold permanently. At this point in time, maybe they have a slight overshot of what they feel an ideal (investment) allocation to Malaysia,” he said.

Pong said currently, foreign investors might just hold to whatever position they had until new factors emerged, adding that they would always have an allocation for Malaysia.

“They will still invest in Malaysia despite any market volatility ,” he said.

Pong said the latest average dividend yield in Malaysia was about 3.2 per cent compared with 2.0 per cent in Indonesia, 3.1 per cent in Singapore, 2.9 per cent in Thailand and 1.5 per cent in the Philippines.

“It is higher than many markets in Southeast Asia. With aggressive initiatives by the government to improve the local infrastructure, it would be useful when foreign fund managers evaluate their investments in the region,” he added.

MIDF analyst Adam Rahim said from Monday to Thursday this week, net selling by foreign investors stood at RM29.3 million compared with RM967.3 million last week.

“We reckon that their focus was on the United States as the Malaysian market was lacking fresh catalysts,” he said.

Adam said optimism was high in the US last week amid the Federal Reserve (Fed) chair Janet Yellen’s hawkish remarks on rate hikes despite her claiming that the Fed misjudged inflation and employment figures, and US President Donald Trump’s proposed tax reform.

“The fall in Malaysian shares had prompted some bargain-hunting this week, resulting in net foreign buying worth RM82.2 million on Tuesday, which coincided with the FBM KLCI’s 0.28 per cent advance on the same day — the biggest daily gain since September 12.”

He believes that the Malaysian stock market will remain attractive for foreigners as selling levels are expected to substantially taper and hopefully return to a net buying level in the coming weeks. Ayisy Yusof