MAYBANK says MSCI’s proposal to downgrade Indonesia from emerging market to
standalone could prompt regional portfolio reallocations that bring Malaysia
back onto foreign investors’ radar. Potential beneficiaries include domestically
focused Malaysian banks, plantation companies and large, highly liquid stocks
whose prices have lagged; MAYBANK views some prior sell-offs as overdone. A
prospective MY Value Up program could further bolster Malaysia’s appeal given
its MSCI representation, mature institutional investor base and sector exposure
comparable to Indonesia. Still, the bank cautions that passive inflows may be
limited because Indonesia’s weight in the MSCI Asia ex-Japan index is relatively
small.
