Franklin Templeton remains optimistic on Malaysia

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KUALA LUMPUR: Franklin Templeton remains optimistic over Malaysia, saying the country is an example of investors being overly negative, despite its economic resilience.

Templeton Global Macro (TGM) chief investment officer Dr Michael Hasenstab said investor fears regarding emerging markets has resurfaced in light of concerns over China.

“This is alongside a potential rise in interest rates in the US, but certain countries are being indiscriminately punished.

“Malaysia is an example, where we believe investors have been overly negative, as it continues to be viewed through a prism of being a commodity exporter.

“Actually, the country has a well-balanced export basket, including electronics, which would be supported by the reemergence of the US consumer,” he said in his write-up titled,’A Macro View of Recent Market
Volatility’.

Hasenstab, who also TGM’s executive vice president and its Portfolio Manager, highlighted that Malaysia maintains a healthy current account surplus and holds a large cushion of international reserves, enough to cover over seven months of the country’s imports.

“Despite this backdrop, the Malaysian ringgit is currently trading near levels last seen during the Asian financial crisis of the late 1990s,” he said, adding, the asset manager also remain optimistic regarding the outlook for Mexico.

Hasenstab said Mexico is another case of a country where the currency is trading at unprecedented levels of weakness, despite having less than 10 per cent of its exports being oil-related.

“Furthermore, Mexico will be a beneficiary of an improving economic environment in the US,” he added.

Franklin Templeton, which oversees about US$855 billion in funds, has been buying debts in Malaysia as global funds flee.

It has over the past two years become the largest holder of Malaysian government local-currency bonds due in the next 30 months, data compiled by Bloomberg show.

“While the Malaysian market has come under extreme stress, we still believe in the long-term value of our investment in the country.

“The Malaysian economy is far stronger today than it was either during the global financial crisis of 2008 or the Asian crisis of the late 1990s,” he was quoted as saying by Bloomberg.

Malaysian ringgit rose to 4.2290 yesterday after it hit an intraday low of 4.2700 to the dollar on Wednesday, the lowest in 17 years ago. — Bernama