Malaysia relatively unattractive to investors: resulting in GDP fall, exports moderation

Malaysia is an unattractive investment destination compared to other Asean nations, this due to its expensive fundamental valuations.

On Feb 1, the VP Bank said in a forecast on Malaysia that the country’s gross domestic product (GDP) will fall from 5.9% to 5% in 2018.

It added that this is due to low investments. which are expected to decline from 6.4% in 2017 to 3.8% in 2018, as Malaysia remains a “challenging market” for alpha investors.

“The critical aspect concerning Malaysia is a quite expensive fundamental valuation. In spite of the robust economic developments, earnings momentum slows down further and the country – as investment region – is relatively unattractive versus other ASEAN countries,” VP Bank said.

Exports increased last year, which was mainly due to the Asia-wide tech cycle. The rising palm oil and LNG volumes and prices also supported the increase, including the rise in rural incomes.

However, VP Bank said: “We expect external conditions to remain supportive in 2018, but export volume growth will likely moderate from its 2017 pace, and imports should pick up further alongside various big-ticket infrastructure projects.”

Further, the inflation rate is expected to inch down to 3.1% in 2018, whilst private consumption will also fall to 5.3%.