KUALA LUMPUR: Malaysia's economic conditions are expected to improve as the newly-formed government announces more positive and stable policy in the near future, said investment firm Franklin Templeton.
Franklin Templeton Asian equity strategies portfolio manager Eric Mok said besides that, the firm expects risk of further disruption to be lower following the partial reopening of the non-essential sectors of the economy.
In addition, Mok said Malaysia would continue to be among the main beneficiaries of the rise in the global semiconductor industry.
"In a nutshell, this will be supported by further diversification from other countries to Asean that benefits Malaysia and better Covid-19 situation.
"In terms of foreign fund flow, while we have not seen a a big reversal of inflow yet but the outflow has stopped since August. We do see things to improve from here on," he said during Franklin Templeton's webinar on "Emerging Market outlook: Investment themes and opportunities in China, rest of Asia and beyond" today.
Franklin Templeton emerging markets equity senior managing director Chetan Sehgal said emerging markets remained less levered than developed markets at the sovereign, corporate and household levels despite the significant impact of Covid-19 on fiscal resources.
He said economic recovery could be more muted than earlier expected, although China's growth continued to be strong.
"Ongoing regulatory change in China has ramifications across sectors. Internet sector is bearing the brunt of the changes, with an impact on earnings power," he added.
Sehgal, however, said emerging markets' valuations remained cheaper relative to developed markets. This was driven by increased earnings in cyclical sectors and reduced multiples in certain key technology and internet companies.