ML: Malaysia dissapointing

BT: MERRILL Lynch Asia Pacific Ltd is not too excited about Malaysian stocks, citing the lack of policy reforms in the country and weak prospects of returns as reasons. It has a small underweight call on Malaysia in the regional context because shares in Malaysia are among the most expensive in Asia ex-Japan, its head of investment strategy Stephen Corry said."For a nine per cent earnings growth in Malaysian stocks, you have to pay 14.5 times price-earnings (PE) multiple. That's close to 20 per cent premium to what you get from the rest of the region for better earnings growth," he said in an interview in Kuala Lumpur. The higher valuations for Malaysia are difficult to justify, he added.

At a time when the world faces an exceptionally tough period of surging inflation, looming recession and a US subprime crisis that continues to roil financial markets, policymakers' decisions on how a country would tackle the problems have come under the close scrutiny of money managers. In this aspect, Corry said, Malaysia has not made much progress compared with its Southeast Asian peers."I was disappointed by Malaysia's recent decision to tax the IPPs (independent power producers) and the plantation groups. It is even more disappointing when taking into context what's happening in Thailand," he said. Thailand, despite having political problems that have gone on for years, has managed to come up with a more effective policy to help the low-income group via an economic stimulus package. "Thailand is only just under 10 times PE for 22 per cent earnings growth. Malaysia does not look that attractive, actually. So, we are overweight on Thailand and have an almost negligible underweight on Indonesia," Corry said. Even Indonesia has managed the fuel price increase better than Malaysia, he added. Indonesia gave the population three weeks notice before petrol prices were raised, which minimised the shock effect and political dissent. The fuel price increase in Malaysia took effect almost immediately after the announcement. "I think we are getting to a point where policies, positive or negative, will have a big influence on whether one country's assets are more attractive than others. "With Indonesia and Thailand doing the right thing, Malaysia could do much more, but it hasn't."

MyTake: ML's comments are fair and well said based on the current state of affairs our country is in right now. In fact, we should by now getting more negative but constructive remarks from research analysts and market commentators and not only from the opposition parties in general. Our situation (politics, investment climate and economy) is getting from bad to worse and unless some miracle happens, we will continued to be criticised and slammed while watching helplessly our investment net worth in RM shrinking by the day. Sigh!

* On our recent Budget- The Edge: Out of 24 companies requested to comment, 22 of them said the budget is GOOD while 2 of them BAT and Hitachi Data Systems said otherwise. The 12 consecutive budget deficit with a deficit of 4.8% of GDP in 2008 and expected to lower it to 3.6% in 2009 cannot be classified as GOOD.....

* South Korea may act on Won slump, its worse in 4 years.

* Bloomberg News:

* 1) Aussie dollar falls to one-year low on bets interest rates to be cut soon, the 1st time since 2001.

* 2) Thailand declares state of emergency today and election results invalid? The stock market was surprisingly resilient and remains open today.

* 3) Japan's PM Fukuda resigns yesterday after holding office for less than a year due to political gridlock, plunging approval ratings and party disarray.

* Shorter trading in stock and futures market in Malaysia soon? I prefer longer hours...lets stay close to what Singapore is doing....cannot be very wrong I am sure.

* BT: Central Banks in Thailand, Malaysia and Indonesia were suspected of intervening to defend their falling currency. 1US: Baht34.47, RM3.419 and Rp9,190.

* TheStarBiz: Commerzbank to buy Dresdner for USD14b making it the largest bank in Europe overtaking Deutsche Bank AG by customers and branches.