Steer clear of costly Malaysian equities, investors warned

Valuations are the second-highest in ASEAN.

Malaysian stocks have fallen by around 30% in US dollar terms since the beginning of the year, but analysts at HSBC still believe that prices in the Malaysian bourse are unjustifiably high.

A report by HSBC highlighted that Malaysia has the second-highest equity valuations in the region as 14.6x forward earnings.

“There has been some decline in multiples, but equities look expensive, especially as ROE slides lower. Malaysia traded at a forward PE of 13x during September-October 2011, so multiples can fall further,” said HSBC.

The outlook for Malaysia isn’t very promising either, as low commodity prices have hurt crude and palm oil exports. At the same time, households are reeling from high household debt and, more recently, the implementation of the goods and services tax (GST).

Further, HSBC believes that Malaysia’s sovereign rating will be downgraded as the leveraged economy has deteriorated.

Although local funds can keep valuations high for the time being, HSBC believes that there enough reasons to be cautious about Malaysian stocks.

“Domestic funds, willing to build equity exposure, have been able to keep multiples higher. This could continue but for now, with earnings at risk coupled with some de-rating, we remain cautious on Malaysian equities,” said HSBC.

The people you want to reach are already in this room.

Every quarter, SBR lands on the desks of the founders, CFOs, and directors running Asia's most consequential companies. Every day, they open our newsletter and read our website. It's a room that took twenty years to build — and it's the one most of our partners are trying to get into.

The good news is that the door is open. We work with companies on thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. The shape of the right partnership depends on what you're trying to do, which is why we'd rather start with a conversation than send a rate card.

If you have something this room should know about, tell us. We'll tell you honestly whether we can help, and how.

No rate cards until we understand the brief. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia