PETALING JAYA: Malaysia is likely to benefit from regional and multilateral trade initiatives, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which will help boost trade and investment across Asean.
In a statement today, UOB Malaysia managing director and country head of personal financial services Ronnie Lim (pix) said the stronger connectivity and closer trade links with the regional partners will help enhance the country’s resilience against rising global trade protectionism.
Over the medium term, Lim said the bank expects the economy to continue on its growth trajectory given its strong fundamentals and ongoing policy reforms to stimulate growth through labour productivity, capital spending and technology.
Despite its expectations for moderate global growth in 2019, the bank expects Malaysia’s gross domestic product (GDP) to expand by 4.9% this year, albeit at a slower rate than last year.
Additionally, he said the domestic growth is likely to be supported by strong demand from private consumption and steady inflow of foreign investments and exports.
Lim said the new administration’s efforts to build a more transparent government, steady growth, low unemployment and a surplus current account will also help support the domestic economy in the year ahead.
Nevertheless, Lim said that even as interest rate increases are expected to slow in the year ahead, the overall environment of quantitative tightening, low private sector loan growth and trade conflicts are contributing to expectations of slower global growth.
“This is causing estimates of lower investment returns in 2019,” he said.
Against such a backdrop, he said investors with a medium to low tolerance for risk and with a long- term investment horizon should stay defensive and prudent throughout 2019.
These investors should consider anchoring their investment portfolios in low volatility investments that can generate sustainable income while mitigating wider market risks, he added.
“In developed markets, we are neutral on US and Japanese equities, and slightly negative on European equities. With the sell-down in late 2018, the absolute valuations of US equities look reasonable, but relative valuations to other regional equities remain elevated.
“We are also positive on emerging market equities. We favour Asia (ex-Japan) in light of the region’s healthy economic growth and compelling valuations. Within the region, China equities offer better return potential as valuations have fallen following the recent market sell-off,” Lim added.
