KUALA LUMPUR: Malaysia’s readiness to accept and embrace technological disruptiveness will help the country's ongoing endeavours in becoming a developed nation by 2020.
In a briefing held earlier today, Franklin Templeton Investments executive vice president and the director of Global Emerging Markets/Small Cap Strategies, Chetan Sehgal said that Malaysia is in the “sweet spot” to capitalise on the disruptions.
“We see opportunities not only in disruptive technology companies, but also in companies that are using technology to change industries. The underlying trend are the same across the EMs and that is, disruptions, will spur growth,” he said.
“Malaysia in particular is in the sweet spot because as these changes are happening, regulators are very open to accept the change, embrace it and capitalise on it.”
Chetan said digital contribution to Malaysia's steadily growing gross domestic product (GDP), however, is not completely known.
“Yes, the regulators are open to the disruptive changes but as of now, from what we can see, the local government has not yet completely captured the true statistics generated from this new tech-driven economy,” he said.
“We believe that it is robust and growing but we do not know to what extent as there's no comprehensive statistical data to back this. That said, Malaysia has been performing well across all sectors last year, exports remain vibrant and GDP is still growing and these all are great indicators for an economy.”
Despite the growth, Franklin Templeton is still “underweight” on Malaysian stocks in comparison to other emerging markets (EMs) in Asean such as Thailand Indonesia.
“The story with Malaysia is that it is always down to stock pickings as not many companies here have the kind or market capitalisation (market cap) and liquidity that we are truly comfortable with,” he said.
“Malaysia has always been stuck in the middle because despite the currency fluctuations, it is never cheap enough and it is never fast growing enough for us.”
However as part of the collective EMs known as Asean, Malaysia is still very much a compelling destination to invest in.
“In both stocks and bonds, we believe the performance potential in EMs will exceed that of developed markets over the next five or 10 years,” said Chetan.
“This will be backed by EM’s higher productivity growth rates and ongoing conventional monetary policy to control inflation. We believe that this will result in a broad appreciation in EM currencies, over the long term.”