Foreign investors are cashing in on Malaysia’s improving economic prospects

Things are looking up for Malaysia, with more foreign investors cashing in on the country’s improving economy and strengthening currency, market participants told CNBC on Tuesday.

The Malaysian ringgit has been one of the best-performing currencies in the region this year, while domestic stocks have gained around 8 percent. In fact, the country’s brightening prospects received a nod from the International Monetary Fund, which on Monday upgraded its growth forecast to 4.8 percent from 4.5 percent.

“After three years of pretty dismal performance coinciding also with the weak ringgit … there has been a marked turnaround, slight strengthening in the ringgit recently and the market looks a bit better,” Gerald Ambrose, chief executive of Aberdeen Asset Management Malaysia, told CNBC at the sidelines of the Invest Malaysia 2017 conference.

Ambrose said a larger proportion of companies listed on the local stock exchange, Bursa Malaysia, beat earnings expectations in the first quarter this year — a “sea change” from the last two years.

As a result, about 10 billion ringgit ($2.3 billion) flowed into the country’s equities market in the first six months this year, noted Zafrul Aziz, group CEO of Malaysia’s second largest bank CIMB.

“We’re confident that we’ll see more (fund inflows) based on the pipeline. In the capital market this year in Malaysia, we’re looking at fundraising in excess of 100 billion ringgit. Last year, it was less than 100 (billion), so definitely we believe there will be funds coming in,” he said.

The commodity-reliant Southeast Asian country was battered by a slump in oil prices, which weakened the ringgit. A money laundering scandal involving state fund 1MDB, which raised questions about governance and transparency, hit sentiment further.

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