Looking for contagion from Turkey's economic crisis? You won't find it in Malaysia.
The Southeast Asian nation's stock market surged into overbought territory last week and the sole U.S.-listed exchange-traded fund tracking the measure attracted the most cash since 2011. The rally came as investors in developing-nation assets fretted over whether Turkey's plunging currency would spark a sell-off in other countries.
The iShares MSCI Malaysia ETF (EWM) attracted $106 million last week, or almost 20% of its total assets, and the Malaysian equity index has recovered 8.7% from a July low. Foreigner investors have begun to return to the country after a flight following the surprise victory of Prime Minister Mahathir Mohamad, who decided to review some infrastructure projects and revealed the extent of a corruption scandal from the previous government.
"Foreign direct investment and exogenous demand for domestic goods is such a fantastic stimulus for an economy like that," said Andy Wester, senior investment analyst at Proficio Capital Partners.
While Malaysia's ringgit hasn't escaped unscathed amid the weakening in emerging-market currencies, it's held up well compared with other Asian countries' currencies.
That's likely added to the allure of EWM, which has almost 40% of the fund's exposure in banks. At the same time, the ringgit weakness will make Malaysian oil cheaper overseas, giving a boost to the country's crude producers and investor sentiment about the broader economy.