KUALA LUMPUR, Aug 29 — Malaysian equities have surged to their highest levels in four years, driven by political stability and a surge in foreign investment in artificial intelligence.
The benchmark KLCI index has seen a significant uptick, with foreign investors pouring billions into Malaysian stocks in recent months, according to a report published in Bloomberg today.
This marks the highest net buying by foreign investors in over seven years, reflecting growing confidence in Malaysia’s economic prospects.
The country’s efforts to attract AI investments have played a crucial role in boosting its appeal to global investors.
Prime Minister Datuk Seri Anwar Ibrahim’s leadership has been instrumental in creating a stable political environment, which has further strengthened confidence in Malaysia’s future.
The government’s focus on AI development has attracted interest from tech giants, enhancing Malaysia’s investment prospects.
“Malaysia is benefitting from better politics and the AI boom,” said Nirgunan Tiruchelvam, an analyst at Aletheia Capital.
The shift in investor focus from China and India to Malaysia has also contributed to this surge.
Data from Bloomberg shows global funds have bought about US$536.5 million (RM2.32 billion) in local shares this year, on pace to hit the highest annual inflow since 2022, compared to withdrawals of about US$11.5 billion over the past six years.
Additionally, Malaysia’s bonds have outperformed other emerging Asian markets, generating a 9.2 per cent return this year.
The Malaysian ringgit has also strengthened, reaching its highest level since early 2023.
According to Tareck Horchani, head of prime brokerage dealing at Maybank Securities, the currency’s strength is supported by the positive equity market outlook and a broader dollar sell-off anticipated due to projected Federal Reserve rate cuts.
Malaysia is experiencing a surge in foreign investment, similar to Indonesia, as investors shift away from China and India.
However, Malaysia’s political stability under Anwar has set it apart, boosting its attractiveness to investors.
Anwar’s leadership has stabilised the political landscape and focused on advancing Malaysia’s AI development.
The country’s existing reputation as a global chip testing hub has been further enhanced by attracting significant investments from tech giants like Microsoft, Nvidia, and Alphabet.
This positive economic outlook is also reflected in the strong performance of Malaysian bank stocks, with several leading banks experiencing significant gains, indicating robust investor confidence in the country’s economic future.
