‘Malaysians are increasingly sophisticated in investing’
KUCHING: Majority of Malaysians already have exposures to investments other than bank deposits, reflecting the growing sophistication of the market here, reveals Franklin Templeton Investments (Franklin Templeton) yesterday.
Franklin Templeton noted that close to 70 per cent of them have their money in unit trust funds, which is second on the top of the list after bank deposit.
According to the annual Franklin Templeton Global Investor Sentiment Survey (GISS) Malaysia report released yesterday, there is also a growing number of Malaysians recognising investment opportunities that are available at home and abroad.
The survey polled over 11,000 investors in 22 countries across Asia Pacific, the Americas, Europe and Africa on their current attitude towards investing and their expectations for 2014 and the decade ahead.
More than half of the respondents believe Asia will deliver the best equity and fixed income returns in 2014 and the next 10 years. In terms of equity, 37 per cent of them expect Asia (ex-Malaysia) and 22 per cent think Malaysia will deliver the best equity return this year.
Meanwhile 30 per cent and 21 per cent expect Asia and Malaysia, respectively, to deliver the best fixed income return this year.
Referring to the data, Sandeep Singh, Franklin Templeton’s country head for Malaysia said, “It is interesting to see this shift as it shows that Malaysians are open to the idea of investing further abroad, in addition to their home country and Asia, the latter two markets that they are traditionally comfortable with.
“This is shown in the findings where 14 per cent of them believe the US market will generate the best equity return in 2014 beyond Asia and the home country.
“This is supported by another finding in our survey that 45 per cent of Malaysians plan to invest in funds based in foreign currency and 52 per cent of them ranked US Dollar as their top foreign currency choice.
“This is a healthy trend, as it reflects the local investor’s growing sophistication and interest in diversifying one’s investment portfolio and managing singlecountry and currency risks.”
Sandeep added that he believes the vote of confidence for Asia and Malaysia was also due to proximity and familiarity with the markets.
“We believe the positive expectation is also attributed to the fact that several Asian economies display solid economic fundamentals and long-term growth prospects. In the case of investing in the US market, the respondents’ sentiment could be driven by the improving US economy.
“We believe the US is in the middle of transitioning from a recovery economy to a self-sustain- ing growth cycle due to improved consumer sentiment and spending, rising corporate profit margins and strong balance sheets,” he explained.
Notably, Petronas and its PSC partners awarded multi- billionringgit service contracts in 2013, which propelled the outstanding order books of major O& G support service providers to record highs; more contracts are in the pipeline.
“Even so, increasing financial leverage and heightened execution risk pose downside challenges to the credit profiles of some players. Emerging trends include the debut of new players and the proliferation of mergers and acquisitions (M&As), some of which are debtfunded,” RAM pointed out.
Last but not least, RAM shared its views on the implications of the Government’s recent decision to defer toll-rate hikes for 14 highway concessionaires. As the toll operators will be compensated, RAM believes that the sanctity of the contracts has been upheld by the Government, thereby reaffirming our stable outlook on this sector.
“That said, toll-rate increases and ballooning compensation payments will be recurring issues, the resolution of which may entail more restructuring. We derive comfort from the knowledge that past restructuring has mostly been credit neutral.”