JPMorgan says South-east Asia benefiting from supply-chain shift
SOUTH-EAST Asian markets remain attractive as supply-chain shifts away from China to the region will mitigate some of the impact from a slowdown in the world’s second-largest economy.
“South-east Asia remains in a sweet spot,” Rajiv Batra, South-east Asia and emerging markets equity strategist at JPMorgan Chase, said on Bloomberg TV.
China’s growth slowdown will impact South-east Asian exporters, but there is some cushion due to the ongoing supply-chain shift from the country towards the region, he added.
The US bank is overweight on Indonesia and Vietnam as those two markets have been at the forefront of attracting foreign direct investment flows from supply-chain shifts as well as friend-shoring and nearshoring.
It is neutral on Singapore, while being underweight on Malaysia and the Philippines.
The MSCI Asean stock index has fallen around 3.5 per cent this year so far, lagging the MSCI global Emerging Markets index, which has offered returns of around 5 per cent over the same period.
Moreover, South-east Asian central banks are expected to keep rates on hold in the second half, JPMorgan’s Batra said.
Policymakers in the region did not hike as much as their global emerging-market counterparts due to more benign inflation, so they are likely to announce fewer rate cuts following the pause in the second half, he added. BLOOMBERG
Share with us your feedback on BT's products and services
