This article first appeared in The Edge Financial Daily on October 11, 2017 - October 17, 2017

KUALA LUMPUR: The outlook for Malaysia as an investment destination looks positive as the country stands to benefit from an improvement in global growth, two fund managers said yesterday.

UOB Asset Management (M) Bhd chief executive officer Lim Suet Ling said that in the medium term, global markets are expected to maintain a positive growth trajectory as the US Federal Reserve (Fed) is expected to continue its path towards gradual interest rate hikes, and as the European Central Bank completes its asset purchase programme by 2018.

“Malaysia tends to benefit as global economic growth moves up. Oil prices have also stabilised and with a slight upward movement this could benefit our economy,” Lim said at a news conference to announce the launch of the United Global Income Focus Fund (UGIFF). The fund is sub-managed by Wellington Management Singapore Pte Ltd.

Wellington Management vice-president and investment director Andrew Sharp-Paul said the Malaysian economy is well positioned to take advantage of the improving global economic cycle.

“The monetary policy in Malaysia today is adequate, and there is a very credible central bank as well to help navigate any market changes as they evolve.

“[On asset classes] I think we are largely neutral on Malaysian debt and the equities are where we would probably be favouring as with the improving global economic cycle, equities are typically in [a] better position to take advantage of,” he said.

Presenting a global perspective, Sharp-Paul said 2018 will be “a good year for equities”.

“I think the challenge in 2018 would be the [economic] policy uncertainty, especially from the US ... we have tax reforms which are still uncertain, we need to see stronger support within the Republican party as the infighting does not help.

“The other bit of uncertainty out of the US is the composition of the Fed. How US President Donald Trump decides to build the Fed [board] is important because it gives the market an indication on what sort of policy we are going to see,” he said.

Sharp-Paul said European and Asian equity markets look to be in a good position in 2018.

“The election of French President Emmanuel Macron and the re-election of Angela Merkel as German chancellor are positive as they help bring the European Union closer together.

“Asia is the place to take advantage of an improvement in global economics, and as long as China maintains its solid growth trajectory, that will be good for Asian markets as well,” he said.

UGIFF, which made its official debut in the market on Oct 2, is a multi-asset all-weather fund, which means that it delivers reasonable performances during both favourable and unfavourable economic and market conditions, through portfolio diversification.

The fund seeks to offer investors the potential for regular income and capital appreciation by investing in a broad spectrum of global asset classes that outperform the different economic environments — growth, weak growth, stagflation and inflation. It aims to provide investors with returns of between 4% and 5% per annum, distributed quarterly.

The fund will invest a minimum of 90% of its net asset value in the target fund, which is the United Income Focus Trust managed by UOB Asset Management Ltd in Singapore.

As at Aug 31, assets under management for UOB Asset Management Malaysia stood at RM7.61 billion.