Malaysia: In The Thick Of It
In January we produced our first country report of the year, Malaysia: Turning Chinese. We argued that the business cycle had turned in Malaysia’s favour and, when coupled with China’s interest in turning Malaysia into its Asean Belt and Road Initiative springboard, the prospects for one of Asia’s forgotten markets looked good.We had ten meetings over our three-day country visit and while most of our contacts viewed the ruling party and its prime minister with distaste verging on disgust, not one of them expected Najib Razak to lose the general election that had to be called this year. On 9 may he did just that, in spectacular fashion.
But while none of our contacts on that visit predicted Najib’s demise a young analyst we had met up with in Hong Kong a couple of months earlier had done precisely that. Working at that time in Beijing, Ryan Soh told us that he expected the opposition to topple the incumbent Barisan Nasional coalition. Before the election had been called Ryan had returned to Malaysia to work with Parti Keadilan Rakyat, Anwar Ibrahim’s party with the opposition Pakatan Harapan grouping.
As the extent of the scandal surrounding 1-Malaysia Development Berhad is unveiled and Malaysian assets take a tumble as a result we view the opportunity to buy cheaply into an economic and political revival as a golden opportunity for Asian investors.
In the attached country report: Malaysia: In The Thick Of It, Ryan tells the story of the demise of one of Asia’s longest serving government coalitions and his hopes for the future.
Best for now
Jim
Asianomics, founded by Dr Jim Walker in 2007 and based in Hong Kong, specialises in economic analysis research, cross-referencing their work with credit cycles, profit cycles and cash flows. Asianomics focus is on developments in the Asia-Pacific region, and they also cover developed markets like the US and Europe.
The Austrian Economics model provides a framework for the economic research. The basis of the School of Austrian Economics is that economies work more efficiently and effectively when companies and individuals are free from excessive interference by government and special interest groups. The Asianomics economic research team includes Deputy Chief Economist Sharmila Whelan who is recognised for non-consensus thinking and her depth and quality of primary research, and Chief Economist Dr. Jim Walker.
Asianomics’ subscribers have access to regular economic commentary, stand-alone Country Reports, Special Reports and Investment Strategy Reports. Dr. Jim Walker also provides weekly webcasts.
Dr. Jim Walker is regarded as one of Asia’s leading economists. Prior to setting up Asianomics, he was the Chief Economist at CLSA Asia-Pacific Markets, where he worked for more than 16 years. He has achieved numerous ‘Best Economist’ rankings in the Asiamoney, Institutional Investor and Greenwich surveys of fund managers.
Previous successful calls include:
- In 1995 Dr. Jim Walker wrote about the prospect of Asia being forced off its de facto dollar peg “within the next two-three years”. The Asian Crisis, precipitated by the Thai baht devaluation, began in July 1997.
- Forecasted the US 2007 downturn and financial sector meltdown in series of ‘Apocalypse’ reports.
- Called early the upswing in the Indian stock market in the final quarter of 2013.
Recent Recommendations:
- Overweight China - We are overweight Chinese equities with momentum improvement in the economy.
- Short Sterling, Long Renminbi - China’s currency offers good upside with a positive carry.
- Short European Financials, Long Indian Financials - This is the simplest pair trade to play superior demographics and growth in Asia relative to the region with the biggest problems.
- Long EM Asia, Short Developed countries - South and SE Asia, and direct investors from North Asia, are ‘buy and hold’ investment bets.
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