This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Taking the Long-Term View on Malaysia

Stocks in this article: EWM EEM SPY

NEW YORK ( TheStreet) -- Malaysia made news earlier this week when the ruling coalition government narrowly held control in elections whose outcome was far from certain.

The uncertain outcome has been cited as reason for Malaysia's Kuala Lumpur Composite index lagging other countries in the region. After the election the market rallied as a sort of sigh of relief.

Malaysia is not a new investment destination but it can be a frustrating investment destination. There are no Malaysian ADRs traded on the New York Stock Exchange or the Nasdaq. There are plenty of Malaysian stocks on the pink sheets to choose from but liquidity and market data on these shares can be hard to come by. For many years the easiest investment option has been the iShares MSCI Malaysia ETF (EWM).

Malaysia is an economically important country as a heavy exporter of electronics (think contract manufacturers), energy products and it is the world's second-largest producer of palm oil (although palm oil exports have recently decreased).

EWM is a broad-based fund that serves as a proxy for the Malaysian stock market. Like many Asian markets, the financial sector is by far the largest at 31% followed by industrials and telecom at 12% and consumer staples, consumer discretionary and utilities all at 10%.

Malayan Banking Berhad and CIMB Group Holdings, both banks, are the largest positions in the fund with each one having a 9% weighting. Both banks appear to have a close price correlation with each other and EWM, so it will be difficult for the fund to do well in the face of a downturn in the country's financial sector.

It is also worth noting how little volatility there is in the two bank stocks and the fund. iShares reports that EWM's beta is only 0.22. Beta is a measure of volatility where the S&P 500 is considered to have a beta of 1.00. The lower the beta, the less-volatile the stock or fund is thought to be.

The typically low volatility does not mean the fund can't go down dramatically. During the 1997 "Asian contagion" it fell 80%, and then in the financial crisis a few years ago it fell 52%. It is also a good bet that whenever the next global crisis comes, EWM will again have a large decline.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs