21 June 2018, London – Maybank Kim Eng, the investment banking arm of Maybank Group, said at its Invest Asia UK conference today that Asia’s underlying fundamentals remain solid with resilient growth prospects despite headwinds from US-China trade friction and rising US interest rates.
Held at Grosvenor House, A JW Marriott Hotel in London, Invest Asia UK attracted more than 400 delegates from 23 countries including 118 funds across Europe with a combined USD19 trillion in Assets Under Management. A total of 51 corporates from 13 countries covering North Asia, ASEAN, and MENA with total market capitalisation of about USD679 billion also participated in the conference. Among the corporates that attended the Invest Asia UK were Thailand’s Charoen Pokphand Foods, South Korea’s Samsung Electronics Co, Sri Lanka’s John Keells Holdings, Vietnam’s Vinamilk, China’s Geely Automobile Holdings, China Telecom Corp, Link REIT, and Lenovo Group.
The investment bank expects the United States and China to continue driving global growth and investment, which will benefit emerging Asia. Rising demand from the world’s two largest economies supported Asia’s export recovery last year. This year, Asia’s private investment is experiencing a revival after a long slump.
Amid gradual US Fed rate hikes, Asian central banks have also begun normalising interest rates, mitigating the impact of a stronger dollar on emerging market currencies.
Dato’ John Chong, Chief Executive Officer of Maybank Kim Eng, says that investors should look beyond the short term noise and focus on the region’s long term growth prospects, which is still expected to outshine that of developed economies.
“While there have been substantial capital outflows as a result of the stronger US dollar, higher interest rates and US-China trade friction, Asia is now better positioned to weather the volatility. Countries in the region have largely strengthened their current account balances, increased their foreign reserves and kept inflation in check over the past five years. Stronger private and infrastructure investments as well as a rising middle class are significant growth thrusts going forward. We believe investors will see real value emerging in Asian corporates after the recent market tantrums and should capitalise on the opportunity.”
The Organisation for Economic Co-operation and Development (OECD) estimates that Southeast Asia is poised to achieve average GDP growth of 5.2% between 2018 and 2022[i]. The region’s growth is underpinned by the improvement in trade prospects, big-ticket infrastructure projects, resilience in domestic demand, and the aggressive drive by some governments to develop industries related to information technology and e-commerce through investment incentives. Venture capital
investments have been surging, allowing new emerging companies to push the boundaries in technology, fintech, and the sharing economy. At the same time, China’s Belt & Road funds are being disbursed for developing major infrastructure projects, including rail transport, ports and power plants, across ASEAN.
Invest Malaysia London, in partnership with Bursa Malaysia, will also be held alongside Invest Asia UK on the second day of the conference to promote Malaysia’s investment opportunities. Six Malaysian companies, namely Maybank, Malaysia Airports Holdings Berhad, Tenaga Nasional Berhad,Top Glove Corporation, UMW Holdings and Yinson Holdings, will be featured.
Dato’ John Chong says the commitment of the Malaysian Government to adopt fiscal reforms and narrow the fiscal deficit bodes well for the economy. “Malaysia’s economy is fundamentally robust, supported by a young demographic, rising oil prices and a reformist government which remains committed and open to trade and foreign investments. Following the recent market correction, the FBM KLCI is now priced attractively at 15.4x on 12 months forward earnings as of June 19. This puts it at the lower end of its trading range of 15.4x to 17.3x over the past three years.”
In 2017, Maybank Kim Eng was ranked among the leading investment banks in ASEAN, topping Bloomberg’s League Table for ASEAN Loan Syndication, and No.2 for ASEAN Local Currency Bonds. Globally, the investment bank was ranked No.1 for Islamic bonds issuance[ii].
[i]Economic Outlook for Southeast Asia, China and India Report, OECD, 2018
[ii]Bloomberg, 31 December 2017