The stock market in Malaysia is stabilizing and picking up pace due to increasing foreign investment and robust economic growth. Over the past year, the Bursa Malaysia index increased by 17 percent while nearly doubling the number of new trading accounts opened in the last calendar year, with 289,000 in the first seven months of 2024.

The market had suffered for a decade: from being battered by political instability and economic challenges at its back, the consequences of the 1MDB financial scandal, and the COVID-19 pandemic. Experts, such as financial planner Stephen Yong, believe the market was undervalued for a long time, and the current situation offers excellent prospects for further growth. According to him, this is explained by the strengthening of economic fundamentals and a recovery phase, which makes the Asia Pacific region, Malaysia included, more attractive to investor funds.

Foreign investments, mostly from US tech giants like Nvidia, Google, and Microsoft, are among the possible reasons behind the stock market’s revival. These companies are opening up their operations on cloud and AI capabilities in Malaysia and further energising the economy there. Johor, the southern state, for instance, is the fastest-growing market for data centres in Southeast Asia.

Most of the total amount came from foreign sources. In the first quarter of 2024, Malaysia had approved investments amounting to 83.7 billion ringgit or $19.3 billion. The country’s GDP was reported to have risen by 5.9% in the second quarter, recorded as one of Southeast Asia’s most significant growth rates ever witnessed.

There is, however caution advice even on this positive momentum. The negative side of foreign investors can also soon retreat from the market if they have better opportunities elsewhere. Political stability has played a substantial role in the recovery of the market. Prime Minister Anwar Ibrahim kept a stable government despite his past political struggle.

Looking ahead, analysts have every reason to think that the stock market in Malaysia has one more step left in its development, especially if foreign direct investment and stable economic policies are to bind the country.

However, there is also a risk, such as slower global growth or disruptions in the global financial markets. On the whole, therefore, the outlook for the stock market of Malaysia remains optimistic since it can live at the current momentum in the economy of the country.

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