Has the economic downturn in the United States finally hit Malaysia and its exchange traded fund (ETF)?

For awhile, the iShares MSCI Malaysia Index (EWM) was one of the few single-country funds exhibiting decent performance despite the woes that seem to have affected other global regions in one way or another. In the last two weeks, though, it’s down 5.5%. Year-to-date, it’s down 2.3%.

What’s going on?

According to Thomson Financial, investors in Malaysia are reacting to, among other things, the recent bad news from Wall Street and the Dow’s loss of more than 300 points on Friday. The mood in Malaysia is expected to remain downbeat because of uncertainty about the general elections, which will take place this Saturday.

The ruling coalition is guaranteed to win, but increasing ethnic tensions and a rising cost of living have many believing that there will be a reduced majority.

Will Malaysia overcome its challenges?

Other Asian markets and ETFs are feeling the pinch from Wall Street, too, and experienced sharp drops on Friday:

• iShares MSCI Australia (EWA), lost 4.5%
• iShares MSCI Singapore (EWS), lost 3.4%
• iShares MSCI Japan (EWJ), lost 1.1%
• iShares MSCI Hong Kong (EWH), lost 3.1%

Tags: Asia, Australia, Coal, Emerging Markets, Hong Kong, Japan, Malaysia, Singapore