Watch the video with Andrew Stotz or read a summary of the country profile on Malaysia.
Four Pillars of GDP: Slight slow down from Q2
Malaysia’s economy is growing relatively quickly at 4.25% in the third quarter but has slowed down slightly from the 4.59% rate in the second quarter of 2016.
Private consumption accounts for about 52% of GDP, and are growing at the highest rate among the four pillars, while net exports remained a drag on growth.
Earnings remain lower in 2016, but hope remains for 2017
Following three straight years of lower earnings-per-share, analysts expect earnings to finally recover in 2017 with and expected growth rate of 5.6%.
Despite the earnings downturn, PE ratios have been sustained due to a dividend yield above the Asia average—about 3%.
A. Stotz Four Elements: Malaysia’s rank relative to Asia
Overall, Malaysia is moderately attractive in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.
Fundamentals: Return on Equity remains just below 10%.
Valuation: The Malaysian market sustains a relatively good dividend yield and trades at 1.5x PB, based on 2017 consensus estimates.
Momentum: Malaysia has the worst momentum in Asia.
Risk: The market features the lowest beta in Asia compared with Asia ex-Japan, low volatility and moderate gearing.
All sectors fell in the Q3
Top 3 largest sectors: Financials: 20% of the market. Industrials: 16%. Consumer Staples: 12%.
Best sector & stock: Materials: +0.3% & Petronas Chemicals Group: +2.2%
Worst sector & stock: Telecom: -8.8% & Axiata Group: -21.5%
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