KUALA LUMPUR (Nov 22): Blackrock Asset Management North Asia Ltd remains "underweight" on Malaysia despite a more optimistic outlook on emerging markets, especially Asia given its positive signs of reflation and steady reform progress.

“We continue to underweight Malaysia. Although we have seen things beginning to improve, certain things need to happen in Malaysia before we move into an overweight position,” Blackrock managing director Steven Moeller told a media briefing on "A Look at Investment Markets Ahead" organised by Blackrock and Ambank Group today.

On some of these things that need to happen first, Moeller explained that structural reform has to happen on a broader base with better progress on social reforms as well as better clarification on the added-value tax.

He, however, stressed that the current outlook for the market remains fluid and depends on the policies implemented by US President-elect Donald Trump once he takes over office.

“We have to take a wait-and-see approach at this point in time and see what the Trump’s government is going to do in his first 100 days in office, to know if he were to take the protectionism stance that he talked about during his presidential campaign,” Moeller said.

Moeller also expects the ringgit to weaken further against the US dollar and that the trend should continue in the near term.

Alex Tan, head of retail and retirement funds at AmInvest, shared that most retail investors remain cautious and are monitoring the situation in Malaysia until at least the first quarter of 2017 to get a clearer picture on the outlook for the country.

Tan said there is too much noise since Trump’s presidential triumph, which led to the plunge in emerging markets’ currencies, especially the ringgit.

Both Moeller and Tan are, however, confident that Asia remains an opportunity for investors, saying that valuations in the region remain below the historical average, improved investor sentiments towards Asia, as well as the gain in momentum in exports.