KUALA LUMPUR: Malaysia’s growth of 3.8% in 2023 is beatable this year, on the back of a better global environment, says HSBC.HSBC’s South-East Asia and India, global private banking and wealth chief investment officer James Cheo said he is positive that the 4.5% economic growth is achievable with stabilisation of inflation and a stronger anticipated consumer consumption.
“Consumption has always been a pillar of growth for Malaysia and with inflation becoming more stable, it will put more money in our hands to spend, which will drive the economy,” he said during a media briefing at HSBC’s Wealth and Investment Outlook for the first half of 2024, yesterday.
According to Cheo, tourism will also see a push, particularly from arrivals from China, although it will not be the same as pre-pandemic levels.
Compared to the rest of the Asean region, he said Malaysia is garnering the lion’s share of tourist arrivals and this will continue to boost the economy.
He added that the green shoots of recovery from the electronic cycle is another positive factor for the economy.
“Malaysia’s strong semiconductor production and commodities market will give investors a good reason to invest into the country. From a foreign direct investment perspective, the chain orientation works well for the country because the Asean economy is linked together and offers plenty of opportunities,” he said.
However, Cheo said in terms of Malaysia’s risk assets, there are some headwinds on the horizon due to the interest rate differential.
“The US federal fund rate is at 5.25% while Malaysia’s overnight policy rate is at 3%, so there will definitely be a dollar strength that we’re up against. This is why I’m a little selective because naturally we find that capital will gravitate towards the United States because of this,” he said.
On investment themes, the bank identified four key drivers that will highlight the growth and income opportunities in the region for 2024. Cheo said the first was Asia’s supply chain being reshaped, as North Asian industry leaders have cleverly diversified their supply chains to go beyond China.
He said the second theme will be how India is a burgeoning economy and one to watch closely because of its demographic and potential.
“India delivered stronger-than-expected growth in manufacturing and services last year, with strong foreign direct investment inflows and booming exports. About 40% of the world’s global capability centres are in India, offering a boost to its economy and job market,” he said.
He said Indonesia has also offered solid growth and is one of the more favourable investment stories in Asia, supported by its large, young and growing population.
The third theme is on the rising wealth and middle-class consumers in Asia; while the fourth theme is on capturing peaking Asian yields.
