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Malaysia ETF Offers a Different Slice of the Emerging Market Pie

12 August 2009 at 10:01 am by Gary Gordon     Bookmark and Share    Follow EtfExpert on Twitter

It’s hard out there for a vibrant, diverse economy that represents less than¬†27 million productive people.¬†¬†Sure, your homeland may have a trade surplus like China, but you’re not China. Your country may boast a wide range of natural resources from oil to tin¬†like Brazil, but you’re¬†not Brazil.¬†You may even be the envy of other Asia Pacific “emergers,” yet South Korea has the Kia “Seoul” and you have yet to dazzle¬†with your¬†capital’s namesake, “Kuala Lumpur.”

It’s not that the iShares MSCI Malaysia Fund (EWM) hasn’t been a standout performer. It weathered the global economic downturn better than most of its peers. And 38% YTD is hardly shabby for 2009… unless you compare it to iShares MSCI Brazil’s (EWZ) 74%, iShares MSCI Korea’s (EWY) 52% or iShares China 25’s (FXI) 44%.

Yet it should be noted that a 1-year perspective shows Malaysia’s true competitiveness. Moreover, the¬†iShares MSCI Malaysia Fund (EWM) is one of the few emerging market ETFs with a P/B below 3 and a low risk beta below 1.


Malaysia ETF 1 Year

Malaysia ETF 1 Year


The population of Malaysia is exceptionally unique, with a majority of citizens following Islam and 1/4 of the denizens are ethnic Chinese. Many believe that Kuala Lumpur is becoming the premier financial center for Islamic transactions. Indeed, the iShares MSCI Malaysia Fund (EWM) has a substantial weighting in financial companies at roughly 29%.

And for those that believe the freedom to conduct business transactions matters to business profitability, consider the web site, DoingBusiness.Org. Of 180+ economies around the world, Malaysia ranks #1 for access to credit and #4 for investor protection. China? #59 and #88 respectively.

Going forward on an investment in Malaysia, there are number of uncertainties. For instance, Tom Lydon at ETF Trends discussed the country’s intention to maintain a strong currency, even at the expense¬†of fewer exports.¬†What’s more, Malaysia’s budget imbalance as a¬†percentage of its GDP is significantly high in 2009. That said, a poll by The Economist¬†sees greater economic expansion in 2010 for Malaysia than it does fro neighbors like South Korea, Singapore, Taiwan and Hong Kong.

From a value standpoint, iShares MSCI Malaysia (EWM) is arguably a formidable player. Acknowledging this, I’ve been more inclined to diversify across Asia with the SPDR Emerging Asia Pacific Fund (GMF). Over time, one tends to see better risk-reward gains from regions than from single country endeavors.

EWM Malaysia Versus GMF Emerging Asia Over 2 Years

EWM Malaysia Versus GMF Emerging Asia Over 2 Years


If you‚Äôd like to learn more about ETF investing‚Ķ¬†then tune into¬†‚ÄĚIn the Money With Gary Gordon.‚ÄĚ You can listen to the show ‚ÄúLIVE‚ÄĚ,¬†via podcast or on your iPod.

Disclosure Statement: ETF Expert¬†is a web log (‚ÄĚblog‚ÄĚ) that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.

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