Like Brazil, Malaysia is plaguing investors with allegations of top-down scandal and corruption.
“Najib faces questions about $700 million that allegedly moved through government agencies and state-linked companies to accounts bearing his name,” according to Bloomberg.
Diminished capital flows due to currency risks could also weigh on the emerging markets. Since investors would pull out of foreign markets if the U.S. dollar strengthens, emerging market currencies would weaken and the local central banks could tighten rates or drain banking liquidity to help stem the flows.
iShares MSCI Malaysia ETF