Navigating Asean’s markets in H2: A balanced approach for a mixed outlook

GOING into the second half of the year, we see the market landscape of Asean presenting a mixed bag of opportunities and challenges. While monetary easing and clarity on US trade policies promise a brighter outlook for equities, lingering uncertainties may still affect earnings. With the probability of a US and global economic recession hovering at an elevated 40 per cent, challenges remain for economies from the Association of Southeast Asian Nations (Asean).

The market’s focus has been on reciprocal tariffs, but the game changer for Asean may be the outcome for exemptions on semiconductors, pharmaceuticals, and certain commodities – whether they will be sustained. For countries like Malaysia and Singapore, where 60 per cent of exports enjoy tariff exemptions, the ongoing investigations under Section 232 of the Trade Expansion Act of 1962 will also play a crucial role in raising the baseline for tariffs for the region.

Monetary policy: a beacon of hope

Rate cuts are expected to provide relief to sectors such as real estate and consumer staples, enhancing liquidity and spurring investment. For instance, Singapore’s strategic S$NEER slope reductions have already lowered borrowing costs, benefiting real estate investment trusts (Reits) and potentially boosting local equity fund subscriptions.