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Some top-tier Malaysian bank shares now offer prospective dividend yields of 6-7%, said AHAM Asset Management Berhad deputy managing director and chief fixed income officer Esther Teo.
That is more than 1.5 times current fixed deposit rates.
In an interview with The Rakyat Post, Teo said valuations look reasonable after the recent drop in bank shares, which could be attractive to Malaysian investors who are weighing this against saving in fixed deposit accounts.
A prospective yield uses today’s share price and the dividend a bank is expected to pay.
At that rate, RM10,000 in bank shares would bring in RM600 to RM700 a year in dividends if banks pay as expected.
Why Bank Shares Are Cheaper
The KL Financial Index is down nearly 5% so far this year, said Teo.
She said foreign investors have been selling Malaysian shares as bond yields rise.
Teo believes the selling has gone too far. Banks are on track for 3% earnings growth this year, supported by a solid domestic economy.
She said many banks have extra capital and are looking to pay out more to shareholders. This fits what the MY Value Up programme encourages, said Teo.
The Securities Commission and Bursa Malaysia launched it on 20 April to encourage listed companies to set out long-term plans to create value for shareholders.
What Investors Should Be Looking At When Starting Out With Their Investment Portfolio
Teo said investors should first look at what they will need to spend and what they owe.
For most Malaysians, much of that will be in ringgit. She said keeping a suitable share of ringgit assets makes sense.
Putting some money in other markets and currencies spreads the risk.
“Building a portfolio is a journey and does not need to happen all at once,” said Teo.
She said investors can add foreign assets when the ringgit is stronger, and build up ringgit assets when it is weaker.
Is AI Still Worth Investing In?
Interest in AI investing began after ChatGPT launched in 2022, said Teo. It picked up speed this year as more businesses and consumers started using AI.
She described it as still early in a growth cycle that is likely to last several years, but not every company will gain equally.
In terms of winners, she named chipmakers (like Nvidia), electronics hardware suppliers, data centre operators and builders, and providers of power and water.
Teo said investors should look at each company’s position against its competitors, how fast its earnings are growing, how much it has to spend to grow, and whether its share price is fair.
She said some share prices may already taken into account good news reported in mainstream media.
In Asia, the strongest markets this year have been Japan, Taiwan, Korea and Singapore, said Teo.
Technology and financials have been the strongest sectors, and AHAM sees opportunities in both.
How Ringgit And Bonds Are Doing
The ringgit started the year strongly, said Teo. It weakened after US-Iran tensions escalated in February and pushed oil prices higher.
She expects the US dollar to stay supported while US interest rates remain high. Over the longer term, she is positive on the ringgit, citing Malaysia’s strong fundamentals.
Teo said AHAM also sees value in Malaysian government and corporate bonds. These are loans to the government or companies that pay interest.
The yield on the 10-year Malaysian government bond rose to 4% in September. It is now around 3.8%.
New Funds Under Amova
Amova Asset Management has taken over AHAM Capital and plans to bring it new products, said Amova president and CEO Stefanie Drews.
These include global, US and thematic funds, which are built around a theme such as technology. Amova will also add global bond funds and solution-based strategies.
AHAM Capital does not offer these products at the moment.
Drews said fund managers in Malaysia still look after only about 40% of the amount held in bank deposits.
That works out to about RM4 for every RM10 in deposits.
For now, AHAM Capital continues to serve clients and provide products, she said.
This article is for general information only and does not constitute financial, investment, or legal advice. Readers should consider their own financial situation and seek advice from a licensed professional before making any decision.
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Should You Buy Bank Shares After The Fall? A Fund Manager Says Dividend Yields Are At 6-7%
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