It therefore came as no surprise when Eurekahedge’s data for the month of May, released last week, revealed that seven of the top 10 returns of last month’s global funds were domiciled in Malaysia. The list, comprising equity and balanced funds, was clearly reflective of the exceptional market performance in Malaysia.
Analysts predict that the latest news of weak employment data in the US could drive more foreign investment into emerging markets, and thus into Malaysia. Malaysia’s prime minister has boosted confidence among investors with his latest announcement that his trade visits to regions such as the US, the Middle East and Asia had stimulated interest from firms to invest over US$6 billion in the country, with an additional RM3.8 billion (US$1.3 billion) already confirmed.
With a total of 847 Shariah compliant counters constituting 89% of the total 957 listed securities on Bursa Malaysia, there is a strong likelihood that the uptrend in Islamic equity funds will continue in June.
Sitting comfortably in this month’s list is Saudi Franci Capital’s Al Qasr GCC Real Estate & Construction Equity Trading Fund. The fund invests in Shariah compliant equities in the real estate and construction sectors in the GCC countries. According to the fund factsheet, its three focus countries are Saudi Arabia, Qatar and the UAE. Its rate of return surged 3.92% last month, according to Eurekahedge.
More interestingly, the second best performer is Sanabel Fund, domiciled in Egypt, with a monthly 3.72% increase in its net asset value to EGP74.19 (US12.49). The fund’s performance reflected that of the country’s bourse, which rallied 6.5% since the 22nd May following encouraging political developments and billions of dollars pledged in foreign aid. Analysts say that Egypt was the best performing market in the Middle East and North Africa (MENA) region in May, and they expect the upward trend to continue, at least for a while, towards pre-revolution levels.
The Egyptian economy has not an easy year in 2011 with the revolution that ousted its president, and has experienced a sharp fall in tourism revenue, domestic and foreign investments as well as depleted employment opportunities in the private sector.
Egypt’s economic growth is also predicted to drop from an previous forecast of 5.5% to a maximum of 2% for the 2010-11 fiscal year, marking the country’s lowest growth rate during the past decade. Analysts caution that the billions of dollars in aid should not be a cause of celebration as it will increase the country’s debt and stifle the economy in the long-term.