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Malaysia ETF Could Be Next to Be Impacted by Politics


Investable countries will be holding elections in the coming months.

To the government's credit, the spending initiatives appear to be having a positive impact. Malaysia posted second-quarter GDP growth of 5.4%. Investments made by the public and private sectors surged 26.1%, Reuters reported.

There are potential risks to the Malaysian economy and EWM itself. While the spending plan has been lauded by the international community, debt as a percentage of GDP in Malaysia has risen by more than a third since 2008. The country's debt-to-GDP of 53.4% at the end of the first quarter was more than 200 basis points higher than that of the Philippines.

That rate is dangerously high to the government's desired limit of 55% and it does put some burden on investors to ignore rising debt levels while embracing the theme of increased domestic consumption.

To this point, the spending gambit appears to have worked. Investors that can grab EWM in the $14.50-$14.60 area can bank on some decent capital appreciation, perhaps up to 5% or more, in the months ahead. They will also be compensated to wait as EWM features a surprisingly decent 30-day SEC yield of nearly 3%.

Editor's Note: This content was originally published on by The ETF Professor.

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