Malaysian Stocks First From Worst on Lowest Volatility 

(Bloomberg) – At a time when slowing economic growth and political protests from Brazil to Turkey are spurring capital flight from emerging marketsMalaysia has turned into a refuge for equity investors.

The FTSE Bursa Malaysia KLCI Index (KLCI) was the biggest loser in Asia just four months ago as the closest elections in 55 years threatened the ruling coalition’s plans to spend $444 billion on infrastructure. Now the $478 billion stock market is the region’s best performer, after Prime Minister Najib Razak’s May 5 poll victory sparked a 4.2 percent rally in the KLCI index.

The gauge will probably rise 15 percent in the next 12 months and maintain the lowest volatility among the world’s biggest markets as Najib boosts spending to reach developed-nation per-capita income levels by 2020 and the nation’s $165 billion pension fund buys stocks, according to Samsung Asset Management. Malaysia has already weathered the 13 percent drop in the MSCI Emerging Markets Index (MXEF) as violence erupted from Sao Paulo to Istanbul to Cairo and economists predicted the weakest Chinese expansion since 1990.

“We have been adding” to Malaysia stocks, Gerald Ambrose, who oversees the equivalent of $1.7 billion as managing director at Aberdeen Asset Management Sdn., said by phone from Kuala Lumpur on June 28. “When the market falls, low volatility is a good thing.”

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