When Singaporean investors look at Malaysia, many are turned off by the risks.
Others, like my co-founder David Kuo, see an opportunity.
Having worked with David for over a decade, I can understand why he talks about the chance to earn better returns in Malaysia despite the risk.
Let me be more specific.
Talk is cheap, so David has put his money where his mouth is. Six years ago, he invested RM 300,000 of his own money into Malaysian stocks.
Here are three reasons why.
Familiar businesses
While Malaysian shares trade on a different stock exchange, they include many familiar brands.
You might have a pack of Maggi instant noodles in your kitchen cupboard, but you cannot invest in Nestle, the owner of Maggi, on the Singapore stock market.
In Malaysia, you can buy shares of Nestle Malaysia (KLSE: 4707.KL).
The Swiss food manufacturer has a long-standing presence in Malaysia, having established operations there more than 110 years ago.
Today, Nestle’s Malaysian base serves as its primary hub for halal products, producing more than 500 different items for export to over 50 countries.
Tiger Beer is a commonality on both sides of the causeway.
However, only on the Malaysian stock exchange can you invest in Heineken Malaysia Bhd (KLSE: 3255.KL), the owner of the Tiger beer brand.
Heineken took control of Tiger Beer after acquiring Asia Pacific Breweries in 2012.
A larger consumer market
Malaysia holds an edge over Singapore when it comes to population with over 34 million residents.
For businesses, a larger population means more consumers to serve. A bigger market also makes it possible for mass-market products to succeed.
Padini Holdings Berhad (KLSE: 7052.KL), an apparel manufacturer, is a good example.
You can think of Padini’s product range as having mass appeal, similar to the “This Fashion” brand in Singapore back in the 90s.
The company has managed to hit the sweet spot of keeping apparel affordable, while also maintaining a measure of quality and durability, thus appealing to a wide segment of consumers.
Get Smart: Dividends, dividends, dividends
If there is one thing which makes David’s investor heart flutter, it’s DIVIDENDS.
After all, money in your pocket is better than money in the management’s hands.
Furthermore, companies with a long track record of paying dividends are also a sign of a profitable business, and therefore, able share their earnings.
On this note, all three stocks mentioned above have consistently paid a dividend over the past decade.
From the trio, Heineken stands out, having increased its dividend by over 137% since 2010 — that’s music to David’s ears.
Heineken is just one example of the type of stock David likes.
Disclosure: Chin Hui Leong does not own any of the stocks mentioned.
