HSBC: Malaysia to benefit from the green shoots of recovery from global electronic cycle


Malaysia’s economy is expected to benefit from the green shoots of recovery this year powered by resilient consumer and investment spending, according to HSBC.

“Malaysia’s economy should remain healthy this year powered by resilient consumer and investment spending. The positive fillip for Malaysia’s economy will come from the nascent recovery of the global electronic cycle and the resumption of global tourism travel,” James Cheo, Chief Investment Officer, Southeast Asia and India, Global Private Banking and Wealth, HSBC said.

“We expect Malaysia’s economy to grow by 4.5 percent GDP growth in 2024, slightly faster than last year’s growth,” he said in a statement on Monday.

“On Malaysia equity market, the consensus earnings for Malaysia are expected to be healthy. The valuation of the equity market is trading below its historical average. Global risk sentiment and international investor positioning could be headwinds for the market. At this juncture, we want to be prudent and very selective with our Malaysia equity strategy.”

“Inflation should continue to remain subdued in Malaysia in 2024. However, there could be inflationary impact from the increase in service tax and reduction in fuel subsidies. We think that Bank Negara Malaysia will continue to remain on hold and keep policy rates at 3 percent for the rest of this year. We forecast the MYR to stay stable at 4.55 against the USD by the end of 2024,” said Cheo, who attended the HSBC Investment Outlook Media Briefing.

In terms of the outlook for investments, HSBC Global Private Banking expects the beginning of Fed rate cuts in June 2024, US soft landing, corporate earnings recovery, and solid Asia growth to improve global risk appetite and investment outlook of equity and bond markets in 2024.

Malaysia expected to see upward trajectory in terms of liquid assets held

Linda Yip, Country Head of Wealth and Personal Banking, HSBC Malaysia said that Malaysia is expected to continue to see an upward trajectory in terms of liquid assets held.

“Malaysia’s onshore wealth pool is sizeable at $359 billion in 2022, and this is expected to grow at a compound annual growth rate (CAGR) of 3.7 percent over the next few years.

“We believe that the right ingredients are in place for this to materialize. From a regional perspective, the growth in private wealth in Asia, resilient spending amongst the middle class, the acceleration of digital transformation, and the green economy are a boon for economic growth, despite headwinds seen in the global economy.

“From a domestic standpoint, the Malaysian economy is expected to see growth this year. This will be supported by an expansion in consumption and investment spending and a favourable labour market, all which are conducive for unlocking investment opportunities,” said Yip.

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