The ongoing trade war between the United States and China continues to shake the global market. We have seen the value of currencies, stocks, and equities rise and fall because of the trade tension.
Recently, the two economic powerhouses slapped each other with increased tariffs on consumers goods. As we have previously discussed, lower salary-earners will take the biggest hit.
US-China Trade War Positive for Malaysia
How will the US-China trade war affect other countries? For Malaysia, Prime Minister Mahathir Mohamed’s economic advisor said it’s positive. Muhammed Abdul Khalid said Malaysia’s economic growth could gain 0.1 percentage points from companies moving out of China.
Malaysia, one of the emerging Asian markets, has been on the list of market experts that could benefit from the ongoing US-China trade dispute. The increased U.S. tariffs could force China-based manufacturers to move some of their operations to locations in Southeast Asia.
Muhammed told CNBC on Tuesday at the Nomura Investment Forum Asia in Singapore, “for us, we see some benefit. We foresee some trade diversion to Malaysia … which is net-net quite good for us”. He added Malaysia is enjoying investment growth, and the possible benefits from the trade dispute will boost the country’s growth momentum further.
Uncertainties After Elections
Last year, in a stunning election upset, Prime Minister Mahathir Mohamad defeated the incumbent Najib Razak, ending the 6-decade long ruling of Barisan National coalition. That resulted in many investors staying away from the Southeast Asian nation. Because of uncertainties surrounding a new government, investors sold the Malaysian ringgit, stocks, and bonds. Furthermore, Malaysia’s stocks suffered and joined the list of worst performing stocks in Asia.
Muhammed said the Mahathir-led government is working to attract foreign companies to set up operations in Malaysia or encourage existing companies to expand their presence. Moreover, he said they’re looking to improve incentives to companies and to make the investment approval process easier.