Prime Minister Najib Razak has been cutting down on government subsidies to limit fiscal risks in an effort to steer the country toward high-income status and toward more domestic consumption. Consumption is now said account for over half of Malaysia’s gross domestic product. [Malaysia Economy Gains Strength]
Even with those efforts, some global investors question the reasoning behind paying up for Malaysian stocks at current valuations, particularly amid expectations of sluggish earnings growth. Valuations are seen as extended for Malaysian consumer discretionary and health care names, among others. Those sectors combine for 11.5% of EWM’s weight. Investors have pulled $56.4 million from EWM this year.
iShares MSCI Malaysia ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EEM.