Malaysia beats emerging market peers as Asia outshines

Turkey has tumbled to bottom of the emerging-market pile, according to a Bloomberg analysis.

Ranked fifth out of 21 nations in a similar study six months ago, the country has slumped on a scorecard that includes metrics ranging from growth prospects to the state of the current account, sovereign credit ratings and stock and bond valuations.

Meanwhile Asia’s economies, which have stronger buffers against headwinds like Federal Reserve policy tightening, outshone the rest, with Malaysia holding on to the No. 1 spot.

Key Insights

Turkey’s economy is forecast to grow 0.8 percent in 2019, down from an estimated 3.5 percent this year, according to a Bloomberg survey of economists. Inflation reached 25.2 percent in October, the highest level since 2003, eroding real yields.

Malaysia remained at the top of the list, thanks to its current-account surplus, relatively stable economic growth outlook and valuations. Data last week showed inflation came in at 0.6 percent in October from a year earlier, compared with its 10-year government bond yield of about 4.17 percent.

Four of the top six economies on the scorecard are from Asia, including China, the Philippines and Thailand. China and Thailand are drawing support from current-account surpluses, relatively strong growth and benign inflation. The Philippines’ current-account deficit and high inflation rates are partly offset by growth of more than 6 percent.

“A closer attention is now paid to economic growth outlooks of each emerging economy amid successive rate hikes,” said Tsutomu Soma, general manager of the investment trust and fixed-income department at SBI Securities Co. in Tokyo. “Investors are also deciphering how each country is impacted by the U.S.-China trade frictions. They will continue to be more selective with their investments given such circumstances.”

• New Straits Times