Malaysia to gain from China’s corporate plan

“Malaysia has an established infrastructure and a competitive edge in advanced semiconductor packaging and testing," Eastsprings Investments's Tsai said.

PETALING JAYA: Malaysia, together with its Asean neighbours, is set to continue benefiting from the “China Plus 1” corporate strategy of supply chain diversification going into 2024, underpinned by a number of regional-specific structural themes.

That is the view of John Tsai, head of growth equities at Eastsprings Investments (EI), who said Asean would be seeing increasing foreign direct investments as the region poses less geopolitical risks.

He added that the region is a strong source of low-cost labour driven by a young and growing population, as well as having a strong manufacturing base.

“Malaysia has an established infrastructure and a competitive edge in advanced semiconductor packaging and testing. Together with Indonesia, it is also blessed with key supply of commodities,” he said at the EI market outlook webinar yesterday.

On top of FDIs, he opined that domestic consumption would also be the primary tailwind of economic growth for Asean, driven by its fast growing population of middle income consumers.

However, Tsai noted that as Malaysia, Singapore and Thailand have the most export exposure in the region by virtue of their respective high trade to gross domestic product ratios, they may continue to feel the pinch of prolonged dampened demand from China.

Looking ahead globally, EI multi-asset portfolio solutions manager Nupur Gupta said the United States could enter into a mild recession over the next six to 12 months, as its services sector – which has been holding up the economy – begins to see a slowdown.

“We are not expecting a deep recession as the balance sheets of corporate America or its household sector look fairly stable and steady, and as such, the US economy should be able to absorb any slowdown,” she said.

The consensus view is that the Federal Reserve (Fed) is likely to cut its fund rates next year. However, she said it would be cautious in doing so by weighing the inflation and growth factors.

Wage growth would be a key point in the Fed consideration as a deceleration in the US wage increase would probably spur its decision to reduce interest rates, she added.