Malaysian equity bulls are pointing to a strong economy, early sure-footedness by the new prime minister and robust consumer spending to justify a rosy outlook for the stock market.
But few foreign investors seem to be buying their arguments, preferring the stellar moves by peers such as Thailand and Indonesia.
The Kuala Lumpur Composite Index (KLCI), which closed for a three-day Lunar New Year holiday on Wednesday, has risen 24 percent in the 12 months to January 20.
Impressive enough until compared with almost any other emerging market in the world and most of the main European and North American ones.
Benchmark indices for Bangkok and Jakarta rose 107 percent and 94 percent respectively for the same period. Bombay's main index was nearly as robust, adding 77 percent, while Karachi's added 61 percent.
Ajay Kapur, regional strategist of Citigroup Smith Barney, warned Kuala Lumpur's under-performance, though good for relative equity valuations versus regional peers, was not about to change.
He picked out KL's price-to-earnings ratio of 15 times versus a regional 13 times, returns on equity of around 13 percent, versus 15 percent regionally, and earnings-per-share growth forecast at about 11 percent against the region's 25 percent.
"It's really as simple as that - it's not cheap, its got low returns on equity and it's going to grow slowly."
Malaysian stocks also lack the high beta rating indicative of a volatile market with potential to amplify any wider rally in equities, a sign of generally stodgier companies, according to the Hong Kong based Kapur.
The one bright spot was Kuala Lumpur's small and medium sized stocks, where gains had been better, he added.
The second board index rose 38 percent in the 12 months to January 20 and the MESDAQ market, for high-growth and technology companies, jumped 81 percent.
Hugh Young, Singapore-based Managing Director of Aberdeen Asset Management Asia, said his company was slightly overweight Malaysia but only by virtue of being underweight Australia.
"If you exclude Australia, we would be underweight Malaysia," he said, adding it was a long-held view he attributed to uncertainties about various politically connected blue chips.
He cited as examples state utility firm Tenaga and phone firm Telekom Malaysia, which with leading lender Malayan Banking accounts for nearly a quarter of the 100-stock main index's weighting.
The choice of stocks aside, Young voiced scepticism about Malaysia's long-term economic growth drivers once oil, gas and palm oil were stripped out of the numbers.
China's threat to Malaysia's electronics-for-export model was one big concern, he said.
New Prime Minister Abdullah Ahmad Badawi, who took over from Mahathir Mohamad in October, faces general elections within months and questions over the dollar-linked currency - but neither figured above company performance in doubters' minds.
Such sentiment rings hollow with equity sales executives in Malaysia, such as investment bank CIMB's Richard Cohen, who say the market is readying for a shot higher.
Cohen points to decent volume behind the KLCI's recent spurt from below 790 points to a 42-month high of 830.76, and mild retracement on thin sales, as a sign of the coming rally.
The market ended Tuesday at 824.66 points, up 0.7 percent.
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