Malaysia’s Stock Market Makes a Strong Comeback After Being Labeled 'World’s Worst'

Kuala Lumpur, Malaysia – Malaysia’s stock market is showing a remarkable recovery, with billions of dollars flooding into an exchange once dismissed as one of the region's poorest performers.

Fueled by Malaysia's robust post-pandemic economic growth and a surge in foreign investments from US tech giants, the Bursa Malaysia's benchmark index has surged by up to 17 percent in the past year.

According to the Bursa operator, 289,000 new trading accounts were opened in the first seven months of 2024—nearly double the total for the entirety of 2023.

Key Factors Driving the Market’s Revival:

• Recovery from a ‘Lost Decade’: Stephen Yong, a licensed financial planner at Wealth Vantage Advisory, remarked that Malaysia’s market is emerging from a "lost decade" during which many companies were undervalued.
• Increased Foreign Investment: Significant investments from tech giants such as Nvidia, Google, and Microsoft have bolstered Malaysia's market. These investments, particularly in cloud and AI capabilities, have played a pivotal role in attracting capital to the country.
• Political Stability: Malaysia’s political environment has improved, with Prime Minister Anwar Ibrahim providing a steady leadership hand, avoiding the turmoil seen in the previous decade.
• IPO Growth: Initial public offerings (IPOs) have also surged, with 34 new listings in the first nine months of 2024, including the major market debut of 99 Speed Mart, which raised 2.36 billion ringgit.

Despite the market’s recovery, experts caution that potential risks, including slower global growth or supply chain disruptions, could affect Malaysia’s open economy. However, ongoing investments in digitization, foreign direct investment (FDI), and a stable inflation rate indicate that the market will continue on an upward trajectory.

Positive Economic Indicators:

• GDP Growth: Malaysia recorded a GDP growth rate of 5.9 percent in the second quarter of 2024, the highest in Southeast Asia after Vietnam and the Philippines.
• Foreign Investment Surge: Foreign investors poured 1.50 billion ringgit ($34 million) into Malaysian stocks in the week ending August 30, marking the highest level since March 2016.

While the market's resurgence is a welcome change, investors are urged to remain cautious, as foreign investors could withdraw at any time if global opportunities arise.

In summary, Malaysia’s stock market comeback is driven by robust economic fundamentals, growing foreign investment, and political stability. Analysts suggest that if the nation continues its momentum in attracting FDI and maintaining a stable inflation rate, the stock market’s growth will continue.