KUALA LUMPUR: Prime Minister Datuk Seri Anwar Ibrahim's announcement of up to RM3 billion of investments by three local funds should boost investors' confidence in Bursa Malaysia.

Economists contacted by the New Straits Times said this is expected to spur more equity investments in the local bourse, particularly in high-growth companies.

"The initiative is also expected to attract more foreign investors, potentially reversing the current trend of net cash outflow from Bursa caused by selling off by foreign investors," Putra Business School economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff said.

The National Fund-of-Funds particularly is part of Khazanah Nasional Bhd's efforts to invest in innovative high-growth Malaysian companies, with an initial allocation of RM1 billion expected to be invested.

The overall initiative is expected to see up to RM3 billion in total investment in the Malaysian and Southeast Asian ecosystem under the Asean Investment Initiative.

Besides Khazanah, the other funds that have committed to the venture are Retirement Fund (Incorporated) and Blue Chip Venture Capital.

UniKL Business School economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid said the allocation may be seen as seed capital.

It positions Malaysia favourably in the region and is expected to attract foreign direct investments (FDIs) as they value the commitment from local government-linked investment companies (GLICs).

Aimi said both domestic and foreign funds will likely response positively to the initiative.

"Bursa needs positive signals like this to stimulate higher transactions, especially with those companies that are seen to benefit from the government action.

"In the last several days, Bursa experienced a net outflow of foreign investment, thus this initiative can make them return to the local market," he added.

SPI Asset Management managing director Stephen Innes said the initiative is geared towards revitalising Malaysia's standing and enhancing its contribution to the semiconductor industry.

He said the initiative holds the potential to catalyse further investment, both from foreign and domestic sources, into the region's burgeoning tech ecosystem.

"By consolidating government-backed venture capital agencies under the sovereign wealth fund and setting ambitious goals to elevate Malaysia's status in the global startup and semiconductor arenas, the country is signalling its commitment to fostering innovation and attracting capital.

"This concerted effort is likely to draw increased interest from international investors and stimulate the emergence of more local players in the tech sector, thereby enriching the ecosystem and driving economic growth," he added.

https://www.nst.com.my/news/nation/2024/04/1041201/economists-announcement-rm3bil-investments-local-funds-will-boost