As the market expectations of interest rate cuts by the Federal Reserve are growing, investors are now looking forward to high-growth investing opportunities in the ASEAN market. It will derive more benefits for the market positioning to benefit from tamed inflation. Since the middle of August month, the Southeast Asian market has touched new heights as Indonesia’s Jakarta Composite Index hit the highest record along with Malaysia’s Kuala Lumpur Composite Index.
Paul Chew, head of research at Phillip Securities Research, stated, “On inquiries from investors, we have seen a jump in interest in Malaysian stocks.”
According to experts, the Southeast Asian stock rally has undergone the expectation of a September cut by the U.S. Federal Reserve. With the upside risk of inflation, there comes a requirement for time to adjust policy. Also, the rate gap between Southeast Asian nations and the US has narrowed as the region’s currency gets stronger against the dollar. Investors are looking forward to the ASEAN market from a long-term perspective, as the Southeast Asia market is expected to grow at an annual rate of 5.1% for the year 2024-34 (as per the joint survey by Singapore’s DBS Bank, Tank Angsana Council, and U.S. consultancy Bain & Co.).
The MSCI dollar-denominated ASEAN index has risen to 6% due to the combined effect of rising stock prices and Southeast Asian currencies. Conversely, the S&P 500 Index is up by only 2%. Some active investors are seeking Malaysia as the best-performing ASEAN equity market. Indonesia has outgrown investments in electric vehicles and batteries. Also, there is robust spending on data centres and semiconductor devices in Malaysia and Singapore.
So, investors are aiming for the ASEAN market to expand their portfolio to encounter inflation challenges.
