Exchange traded funds tracking Malaysia and Singapore rose on Monday following news they have reached a deal to open a transit rail service by 2018 to connect the city-state with a city in southern Malaysia.

The iShares MSCI Malaysia (NYSEArca: EWM) and iShares MSCI Singapore (NYSEArca:EWS) were both fractionally higher Monday.

Focusing on Malaysia, the ETF has traded in a range the past three months with investors weighing a potential drop in global productivity. As a way to reduce its reliance on the global economy, the Malaysian government will be focusing on ways to boost the domestic economy.

The Malaysian government has been helping to stoke domestic economic expansion in the face of diminishing external demand, reports Kaladher Govindan for Business Times. Additionally, with oil prices expected to be supported by growing demand from the emerging markets, Malaysia, a net exporter of oil, also stands to benefit from rising oil demand. Still, oil prices have traded sharply lower in recent weeks on economic worries and the release of reserves.

More recently, the FTSE Bursa Malaysia Kuala Lumpur Composite Index has been dragging its feet following the poor economic data released by the U.S. Additionally, the index extended losses as a result of investor concerns over accelerating global inflation, which may prompt central banks to raise rates.

The Business Times report points to conflicting signals from technical indicators within the Malaysian economy that could suggest the recent strength may begin to stall due to adverse external forces, such as weakness in the U.S. and equities, which could hinder the pace of global growth, along with rising inflation.

Malaysian Prime Minister Datuk Seri Najib Tun Razak recently revealed nine new initiatives under the Economic Transformation Programme (ETP), according to Property Report. The nine new projects could bring in $748.5 million in investments, a GDP impact of $6.15 billion and create 36,595 jobs by 2012. Najib has stated that previous projects under the ETP has generated $56.19 billion in vestments, $72.63 billion in GDP and created 362,396 jobs.

The agriculture sector will be a key beneficiary under the programs, and other projects include improved communications infrastructure and green technologies.

For more information on Malaysia, visit our Malaysia category.

  • iShares MSCI Malaysia

Max Chen 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.

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