Strategy : Some tips on picking Malaysian stocks for investing
PETALING JAYA: Prominent fund manager Mark Mobius expects utilities to be one area which could potentially benefit as subsidies are lifted and profitability may improve as a result.
According to his blog, he also likes consumer-oriented companies that can stand to potentially benefit as Malaysia works toward its long-term goal of becoming a high-income country and “as more of its people potentially rise into the ranks of the middle class”.
In his blog on Investing in Malaysia: The importance of stock picking, he said it was important for investors in Malaysia to be selective, particularly given that valuations had been higher than in some other Asian markets, while at the same time, performance had generally been somewhat disappointing.
“One area of focus is smaller companies that we think have potential for growth, but that have been generally overlooked by other investors.”
Some tips on picking Malaysian stocks for investing
Mobius said his team recently visited a Malaysian oil services company with operations not only here but also across South-East Asia, Brazil, Australia and Africa.
“Lower oil prices are likely to have a significant impact on its operations, and it looks to us like there will need to be some belt-tightening. Nevertheless, some fields in Malaysia are very low cost, at well below US$50 (RM172.40) per barrel. Therefore, lower oil prices don’t necessarily mean companies in the sector will be unprofitable,” he added.
Mobius also said his team visited an auto distributor which was looking forward to expanding from the distribution of automobiles to the assembly of imported Japanese autos. “Management there is optimistic that the auto market here was expanding and consumers were seeking more up-market brands and models,” he said.
On palm oil, one of Malaysia’s top exports, Mobius said the visit to a palm oil plantation firm revealed that palm oil prices were temporarily under pressure, but from a long-term view, the firm expected demand for palm oil globally to increase.
He said the company was, therefore, replacing older palm oil trees with new, higher-producing palm oil trees as well as expanding its plantation acreage.
Mobius said Malaysia was working toward its long-term goal of becoming a high-income country, and as more of its people potentially rise into the ranks of the middle class.
He said there would be a few bumps that could impact this vision, and some policies would not be particularly popular with the people – including not only removal of subsidies but also the implementation of the goods and services tax planned for April 2015, which replaced Malaysia’s 10% sales tax and 6% service tax with a flat 6% tax across nearly all goods and services at each stage of the supply chain.
“As investors, we have to maintain a long-term view and focus on companies we feel can survive and prosper amid changing conditions, and that fill an interesting niche. We also look for companies that have the potential to serve consumers not only in Malaysia but throughout the region, and even globally.
“Currently, we see Malaysia undergoing a period of transition, as old policies must evolve to meet future goals. I would describe our view of Malaysia today as cautiously optimistic – we are certainly hoping Malaysia succeeds in reaching its ambitious goals, and we plan to be there along the way,” he added.
http://www.thestar.com.my
PETALING JAYA: Prominent fund manager Mark Mobius expects utilities to be one area which could potentially benefit as subsidies are lifted and profitability may improve as a result.
According to his blog, he also likes consumer-oriented companies that can stand to potentially benefit as Malaysia works toward its long-term goal of becoming a high-income country and “as more of its people potentially rise into the ranks of the middle class”.
In his blog on Investing in Malaysia: The importance of stock picking, he said it was important for investors in Malaysia to be selective, particularly given that valuations had been higher than in some other Asian markets, while at the same time, performance had generally been somewhat disappointing.
“One area of focus is smaller companies that we think have potential for growth, but that have been generally overlooked by other investors.”
Some tips on picking Malaysian stocks for investing
Mobius said his team recently visited a Malaysian oil services company with operations not only here but also across South-East Asia, Brazil, Australia and Africa.
“Lower oil prices are likely to have a significant impact on its operations, and it looks to us like there will need to be some belt-tightening. Nevertheless, some fields in Malaysia are very low cost, at well below US$50 (RM172.40) per barrel. Therefore, lower oil prices don’t necessarily mean companies in the sector will be unprofitable,” he added.
Mobius also said his team visited an auto distributor which was looking forward to expanding from the distribution of automobiles to the assembly of imported Japanese autos. “Management there is optimistic that the auto market here was expanding and consumers were seeking more up-market brands and models,” he said.
On palm oil, one of Malaysia’s top exports, Mobius said the visit to a palm oil plantation firm revealed that palm oil prices were temporarily under pressure, but from a long-term view, the firm expected demand for palm oil globally to increase.
He said the company was, therefore, replacing older palm oil trees with new, higher-producing palm oil trees as well as expanding its plantation acreage.
Mobius said Malaysia was working toward its long-term goal of becoming a high-income country, and as more of its people potentially rise into the ranks of the middle class.
He said there would be a few bumps that could impact this vision, and some policies would not be particularly popular with the people – including not only removal of subsidies but also the implementation of the goods and services tax planned for April 2015, which replaced Malaysia’s 10% sales tax and 6% service tax with a flat 6% tax across nearly all goods and services at each stage of the supply chain.
“As investors, we have to maintain a long-term view and focus on companies we feel can survive and prosper amid changing conditions, and that fill an interesting niche. We also look for companies that have the potential to serve consumers not only in Malaysia but throughout the region, and even globally.
“Currently, we see Malaysia undergoing a period of transition, as old policies must evolve to meet future goals. I would describe our view of Malaysia today as cautiously optimistic – we are certainly hoping Malaysia succeeds in reaching its ambitious goals, and we plan to be there along the way,” he added.
http://www.thestar.com.my
