Asia will continue to dominate the global investment space in 2012. According to the Asian Development Bank (ADB), although the global economic slowdown will take its toll on Asia this year, the region will still remain the economic powerhouse of the world. It also predicted China, India and Indonesia to be the main drivers of the region with a growth rate of about 7% this year, down from about 7.5% last year and 9% in 2010.
Forecasts for the region have been generally positive however, particularly for Southeast Asia. One analyst places Malaysia in the spotlight, suggesting the country is likely to continue to outperform its neighbors over the next few quarters.
Analysts have based their predictions on the private consumption growth of Malaysia that has reportedly been among the strongest in the region and is expected to remain robust this year. Growth has been supported by high energy and palm oil prices and government cash transfers; as well as pay rises and bonus payments for civil servants and pensioners in the country’s 2012 budget announced last year.
The IMF said that Malaysia’s economy grew by an estimated 5.2% in 2011 and is projected to grow 5.1% in 2012. China is predicted to grow 9% this year down from the projected 9.5% growth for 2011 and India is looking to record a 7.5% growth in 2012, merely 0.3% shy of its estimated 7.8% growth last year.
On the equity market front, the Jakarta Composite Index surged about 3% last year. The FTSE Bursa Malaysia KLCI Index moved 3.53% over a one-year period while the Shariah compliant FTSE Bursa Malaysia Emas Index increased 6.37% in the same time.
With all the positive figures laid out, it looks like Islamic equity funds should be set to have a good year. The performance of the top funds as seen in Table 1 clearly shows that while the returns of these funds are not as significant as experienced in 2010 due to the ‘black swans’ of last year, all but one have provided double digit returns.