Eastspring Investments Bhd., manager of Malaysia’s top-performing stock fund, is boosting cash holdings as the world’s longest-running bull market loses steam amid slowing profit growth, Bloomberg News reported.
The company, whose small-cap fund returned 30 percent in the past 12 months, is holding at least 10 percent of assets in cash across its unit trusts, a historically “high” level, chief investment officer Chen Fan Fai told the news agency.
Analysts predict profit growth at companies in the FTSE Bursa Malaysia KLCI Index (FBMKLCI) will weaken to 3.6 percent in 12 months, the slowest among developing nations in Southeast Asia.
Lower than expected exports, higher interest rates and rising fuel costs are weighing on company earnings.
The benchmark gauge for Malaysia’s US$494 billion stock market is heading for its first annual retreat in six years, after rising 121 percent from its October 2008 low in the longest bull market among nations in the MSCI All-Country World Index.
“We will most likely lag other markets,” Chen was quoted as saying. “Earnings are not as exciting as some other markets and I suppose we lack some kind of a catalyst.”
The Malaysian stock index has dropped 1.8 percent this year, compared with an average gain of 21 percent for equity gauges in Thailand, Indonesia, Vietnam and the Philippines, the report said.
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