Malaysian assets to gain as funds slash US exposure, CIMB says
MALAYSIA could end up among the biggest beneficiaries in emerging markets if the Trump administration's disruptive trade policies trigger a further selloff in US assets, according to a top executive at CIMB Group Holdings Bhd.
'We could potentially see a lot of capital freed up and move to emerging markets,' Novan Amirudin, chief executive officer of CIMB, Malaysia's third-largest bank by market value, told Bloomberg Television's Avril Hong. 'Malaysia has all the parameters that tick the boxes for investors as they look at asset allocation and investments,' he said.
Uncertainty over US fiscal and trade policy is denting the appeal of US assets, with emerging market investors expecting the asset class to benefit as some of that cash finds its way into stocks and bonds of developing countries.
Global funds bought $45.6 million of Malaysian equities so far this quarter, making the country the only emerging Southeast Asian nation to see inflows, according to Bloomberg-compiled data.
Novan pointed to Malaysia's political stability and the government's commitment to improving the country's fiscal position as key factors that make the nation stand out. Since taking over as Prime Minister in late 2022, Anwar Ibrahim has accelerated economic and political reforms after a revolving door of leaders from 2018 to 2022 affected investor confidence.
While Malaysia's economic expansion is expected to come in slightly lower than the 4.5% to 5.5% official growth estimate for the year, strong domestic demand is likely to anchor growth. And though the country kept borrowing costs unchanged earlier in May, traders are pricing in an interest rate cut within the next six months.
Bank Negara Malaysia has 'always been very proactive,' said Novan, who took charge at CIMB in 2024.
He said the government's policies on energy transition, manufacturing and the semiconductor industry would draw more foreign investments. Technology giants including Microsoft Corp. and Amazon.com Inc. have pledged to invest billions of dollars in the country's infrastructure, with Malaysia approving a record amount of investments last year. A planned special economic zone with Singapore will also help 'mitigate uncertainties that a lot of businesses and corporations are seeing today,' Novan said. –BLOOMBERG
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