ETF Trends
ETF Trends

One look at the performance of Malaysia’s exchange traded fund (ETF) is all you need to know that Malaysia has recovered well from the global economic crisis. But, with a global economic slowdown expected, as well as other policy concerns, it is imperative to know the changes that are happening before investing in the country.

According to Ranjeetha Pakiam of Bloomberg, Malaysia’s exports grew at the slowest pace in the last seven months due to concerns over Europe’s debt crisis and an economic slowdown in the United States and China, the latter two accounting for Malaysia’s biggest markets.

Despite Malaysia’s slow growth, exports still rose 17.2% in June from a year earlier. But, the slowdown has led analysts to believe that for the time being, interest rates will remain at current levels. The benchmark interest rate is at 2.75%. [Malaysia ETF: A Shot at Becoming a Darling.]

In order to build upon some of its strengths, Malaysia’s government is trying to develop synergies with India and Singapore. According to the GovMonitor, Prime Minister Najib Razak announced the New Economic Model, which outlines the approach Malaysia will take toward becoming a developed country by 2020. [Asia ETFs: Developed or Emerging.]

In relation to Singapore, the plan addresses how both countries can collaborate to make each other more competitive in the global economy. The “inter-connectedness, in terms of geographical proximity, established business relations, and familiarity with investing and operating in each other’s country, is a comparative advantage” that can be exploited for mutual benefit.

In relation to India, Mukul G Asher of DNA reports that the New Economic Model will encourage business with India and Indian immigrants, who are currently underrepresented in the Malaysian economy.

“As Indian ethnic groups in Malaysia lags substantially behind other groups, improving their status, even in absolute terms, will enable Malaysia to realize its development goals, while enhancing possibilities for cooperation between Malaysian and Indian businesses.”

For more stories on Malaysia, visit our Malaysia category. There are several ways to play the shifts in the Asian economy, including with these three funds:

  • iShares MSCI Malaysia Index Fund (NYSEArca: EWM): up more than 16% YTD (August 6)

  • iShares MSCI Singapore Index Fund (NYSEArca: EWS)

  • WisdomTree India Earnings Fund (NYSEArca: EPI)

Sumin Kim contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.