Just weeks ahead of the country's next general election, the
iShares MSCI Malaysia Index Fund (NYSE:
) is printing new 52-week highs as the country's current prime
minister is increasing handouts in an effort to retain power.
On Tuesday, the iShares MSCI Malaysia Index Fund is higher by
1.2 percent and earlier touched a new 52-week high of $15.55. The
$960.5 million ETF has jumped 5.3 percent in the past month, an
arguably stunning reversal of fortune from earlier this year when
election concerns turned EWM into a laggard
tracking Southeast Asian nations.
In the past month, EWM has easily outpaced the iShares MSCI
Emerging Markets Index Fund (NYSE:
), the Market Vectors Indonesia ETF (NYSE:
) and the Market Vectors Vietnam ETF (NYSE:
), among others.
Earlier this month, Malaysian Prime Minister Najib Razak
dissolved parliament and it is expected the country's Election
Commission will meet Wednesday to discuss a new election date.
Razak is facing opposition leader Anwar Ibrahim in an election
that must be held by the end of this month.
has been previously noted
, Razak is taking a page from the playbook of American
politicians, offering up an array of goodies to motivate
Malaysians to vote for him.
Along with a vow to fight corruption, Razak has promised more
financial assistance for Malaysia's needy and cheaper cars and
homes, among other motivators,
the Associated Press reported
Najib pledged to increase an annual handout for millions of
poor households from $164 to $392, build 1 million low-cost homes
and lower car prices by up to 30 percent over the next five
years, according to the AP.
Last year, Razak unveiled the $444 billion Economic
Transformation Program aimed bolstering domestic demand and
lifting personal incomes. Still, Razak, particularly if he is
reelected, must be careful of how far he takes government
largess. Malaysia's debt-to-GDP ratio of 51 percent is among the
highest in Asia and its deficit-to-GDP ratio is also among the
highest in the region.
One reason investors, EWM holders included, may want to see
Razak emerge victorious is because government policies have
helped buoy Malaysia's domestic demand story.
That has enabled the country
to join the ranks of Indonesia and the
as Southeast Asian economies that have proven durable in a
fragile export environment.
"One follows the other, and the broad policy thrust is to move
towards a high-income economy via re-energising the private
sector to lead growth; developing quality workforce and reducing
dependency on foreign labour; creating a competitive domestic
economy; strengthening the public sector; putting in place
transparent and market-friendly affirmative action; building the
knowledge base and infrastructure; enhancing sources of growth
and ensuring sustainability of growth,"
said Morgan Stanley in a recent research note
At the moment, Razak looks like the favorite and EWM's recent
price action might be a sign the ETF has begun to price in that
result. And that could be a sign EWM investors should be happy
with the status quo.
For more on ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Profit with More New & Research
. Gain access to a streaming platform with all the information
you need to invest better today.
Click here to start your 14 Day Trial of Benzinga