KUALA LUMPUR: The uncertainty of when the 13th general election will be held has resulted in investors sitting out while the “slow progress” of the Economic Transformation Programme (ETP) has been equally frustrating, said Levitt Capital Management LLC founder Robert Levitt.
“When the rules could change on us at any time because we don’t know when the election is going to occur, that creates uncertainty in our minds and makes us uncomfortable making big long-term investment decisions here,” said Levitt, who invests part of his fund’s portfolio in the Malaysian equity market.
Another of Levitt’s concerns is whether Minister in the Prime Minister’s Department Datuk Seri Idris Jala would still be in the Cabinet to steer the Performance Management and Delivery Unit (Pemandu) and the ETP.
“When I talk to brokers here, it is all about the government [getting in the business]. But as an investor, I want to see how the government is getting out of the way [of business]. That is why we are so supportive of Idris Jala and the ETP,” said the fund manager who occasionally appears on CNBC and Bloomberg, adding that the Pemandu chief is well regarded in the investment community.
Commenting on the ETP, Levitt could not hide his frustration over the slow progress and said he thinks the private sector should take the lead instead of the government.
|Levitt: Investors are uncomfortable making big long-term investment decisions here.
“The world is moving fast and that is always going to be the case. Governments don’t move quickly and they never do and never will.
“You have to count on the private sector. So much of the time when I talk to my peers in the investment world about Malaysia, it is about focusing on the government. I think that is a mistake. Governments are just not designed to move quickly. They can’t,” he said.
Levitt, who is buying a property in the country, said that Malaysia should capitalise on China losing its competitive edge in recent times.
“This is giving Malaysia an opportunity now to gain back manufacturing. While MNCs may not move from China to Malaysia, they are re-opening new lines in Penang. Penang has had 10 years of very little growth and then in the last two years it has a growth of over 9%,” said Levitt who is very bullish on Penang and its property market.
According to Levitt, Malaysia would need to focus on what it wants to accomplish next, in order to bring benefits to the average Malaysian especially in bringing up the income level.
“In Penang, you are seeing more factory automation where there is no need for thousands of workers because they can be replaced by robots. What you need is the mid-level manager and that is something that falls into Malaysia’s lap nicely as Malaysia is good at developing the mid-level engineer,” he said.
On his favourite equity sector in Malaysia, Levitt, who was at one time upbeat on rubber gloves stocks, has cast his eyes on healthcare and property stocks.
Speaking from a personal experience when he found healthcare in Indonesia somewhat lacking, Levitt thinks that Malaysia, which has better hospitals, should tap into the Indonesian middle class who seek better healthcare but cannot afford treatment in Singapore due to the higher cost.
“So I will look at healthcare and the property market up in Penang. IJM Corp Bhd is a company that we are very interested in. It is the only company that we have bought shares right now in Malaysia,” he said.
Levitt thinks the Indian Ocean and Southeast Asia region is set to see much growth in the future. “Look at Myanmar. There are 60 million people who need to have mobile phones. Those are huge opportunities,” he said.
Despite the slower growth projected for China this year, Levitt said investment in Asia would still be China-centric even though that may not be the case a decade from now. “China’s growth is three times faster even with the slowdown of the global economy. I would continue to invest in China for the long term,” he said.
He cautioned that the bond market in US would hit a bad patch in the next two years. “We are going to see a major bear market in US Treasuries. That is going to scare a lot of people. You don’t see China buying US bonds. You see China selling US bonds,” he said.
This article appeared in The Edge Financial Daily, March 22, 2012.