Malaysia’s stock market, once considered one of the worst-performing in the region, is making a notable comeback as foreign investments, particularly from US tech giants, and robust economic growth drive renewed optimism. After years of stagnation, the Bursa Malaysia’s benchmark index has surged by as much as 17% over the past year, reflecting a revival that many investors thought was long overdue.
The resurgence has been supported by Malaysia’s strong post-pandemic recovery and increased investments from major US technology companies like Nvidia, Google, and Microsoft, which have committed billions of dollars to expand their cloud and AI capabilities in the country. These developments have boosted market sentiment, with investors opening 289,000 new trading accounts in the first seven months of 2024, nearly double the number opened throughout 2023, according to the Bursa operator.
Stephen Yong, a licensed financial planner with Wealth Vantage Advisory, noted that Malaysia’s market appears to be emerging from a “lost decade” of stagnation, where it was previously undervalued and saw little upward movement. Yong sees significant room for growth, with more investor funds flowing into the Asia-Pacific region, including Malaysia, as the global economy recovers.
The past decade has been challenging for Malaysia’s stock market, weighed down by political instability, economic competitiveness issues, and the fallout from the 1MDB financial scandal. From 2018, the market experienced a sharp decline, compounded by rapid political turnover and the COVID-19 pandemic. A 2019 Bloomberg article even labeled the Bursa Malaysia as the “world’s worst major stock market” after it suffered a 14% slump that year.
Veteran investment banker Ignatius Luke Jr Tan described the market as “moribund” in recent years, with local investors losing confidence. He reflected on how Malaysia’s stock market, once seen as a promising tiger economy in the 1990s, began to lose steam after the 1997-98 Asian Financial Crisis and fell behind regional neighbors like Singapore.
However, market sentiment has shifted dramatically in 2024. Malaysia recorded $19.3 billion in approved investments in the first quarter of the year, with more than half coming from foreign investors. The southern state of Johor, bordering Singapore, has been identified as Southeast Asia’s fastest-growing market for data centers. Additionally, Malaysia’s GDP grew by 5.9% in the second quarter of 2024, the second-largest expansion in the region.
With foreign investor confidence returning, the week ending August 30 saw the largest net buying spree in Malaysian stocks since 2016, indicating that the market is poised for sustained recovery. Initial public offerings (IPOs) are also on the rise, with 34 IPOs registered in the first nine months of 2024, surpassing last year’s total.
