The economies of Asean countries, including Malaysia, are showing “silver linings of resilience” with a strong consumer spending outlook amid continued economic reopening, according to HSBC.
“Over the past decade, Asean economies have undergone a healthy reset as they have deleveraged and continued to invest in infrastructure.
“As a result, Asean companies have developed resilient fundamental strengths and stronger balance sheets to withstand headwinds from the strong US dollar and high US rates,” the bank said in its Investment Outlook Q1 2023 note to clients.
It pointed out Asean stock markets have recorded “one of the strongest earnings growth in 2022”, outperforming global and regional peers. “We expect this trend to continue going into 2023,” it added.
Indonesia and Thailand have some of the most solid economic momentum within Southeast Asia, thanks to strong consumer demand. Valuations remain attractive relative to history and other regional markets, it said.
HSBC said Asean is now a more economically integrated region through the Regional Comprehensive Economic Partnership (RCEP), which is the world’s largest free trade bloc.
“We believe Asean economies can also benefit from the reconfiguration and regionalisation of Asia’s supply chains.
“And selected Asean markets, such as Indonesia, can gain from high commodity prices, proving to be defensive to the inflation shock.”
RCEP is a free trade agreement (FTA) between 10 member countries of Asean and its five FTA partners – China, Japan, Australia, New Zealand and South Korea.
It was signed in November 2020 and aims to reduce tariffs and other trade barriers, promote investment and liberalise trade in goods, services, and investment amongst parties.
The banking giant has also launched a new theme on “Asean Tigers”, capturing growth opportunities in consumption companies, infrastructure, Asean banks and Singaporean real estate investment trusts (REITs).
HSBC did not identify the “Asean Tigers” but it is likely to comprise Indonesia, Singapore, Malaysia, Thailand and probably Vietnam.
Remaking Asia’s Future
On the wider Asia perspective, HSBC said Asian economies continue to stand out as a relative safe haven with resilient domestic fundamentals to weather the recession risks.
“We believe Asian economies can maintain their relative outperformance against the global peers with silver linings of accelerating economic reopening and more growth supportive policy initiatives.
“China’s recent pivot towards gradual relaxation of the Zero Covid policy and more comprehensive policy support for the property sector are notable drivers to support its gradual growth recovery in 2023,” it said.
The bank expects gross domestic product (GDP) growth in Asia ex-Japan to accelerate to 4.5% in 2023 from 3.9% last year, which is still respectable compared with many developed economies which should see close to zero growth in 2023.
“We believe a recovery in China’s consumption and investment amid its gradual reopening would boost the overall growth outlook for the region, given China is the single largest trading partner of 16 major Asian economies,” it said.
HSBC expects North Asian economies, including Mainland China, Hong Kong, Taiwan, South Korea and Japan, to feel the largest positive impact of reopening in 2023.
Southeast Asia should continue to benefit from the strong momentum of overseas travellers’ inflow and tourism boom. In Thailand, tourist arrivals have climbed to only half of pre-Covid levels, it noted.
“We expect the reopening-driven recovery to continue in Southeast Asia and tourism stands to benefit from the boom.”
Asia’s travel and tourism sectors are forecast to grow at an annualised rate of 8.5% over the coming decade, double the pace of 4% growth for the regional economy, it added.
“Riding on the reopening tailwinds, we favour quality industry leaders in the travel, airlines, hospitality, food and beverages, Macau gaming and mass consumption sectors in Asia.”
Opportunities from Asia’s green transformation
HSBC also highlights opportunities from the energy transition and independence, green infrastructure development, and innovation of new energy vehicles technologies in the region.
“We favour renewable energy equipment makers of solar, wind and green hydrogen, smart grid manufacturers and leaders in the Electric Vehicles (EV) supply chains.”
The World Bank estimates China needs to invest up to US$17 trillion (RM74.88 trillion) for energy transition, green infrastructure and technologies to meet its carbon neutrality goals by 2060.
“China is growing into a global powerhouse in EV, and one out of three new cars sold in China is now electric.
“Pure EV plays, some conventional original equipment manufacturers (OEMs) and battery companies can benefit from the net zero transition,” it said.
Southeast Asian countries are also rushing to issue green bonds to finance eco-friendly projects, it said.
“In Asean and East Asia, the amount of sustainable bonds outstanding accounted for about 18% of world’s total, trailing only Europe as the second-largest market, according to Asian Development Bank,” HSBC said.
Source: FMT Media Sdn Bhd
Share:
<p>Time: 2024 By: Ministry of Industry and Trade</p>
