🇺🇸 President Trump's arrival in Kuala Lumpur for the ASEAN Summit is injecting optimism into Southeast Asia's battered markets. The region's equities have lagged emerging markets peers, shedding value amid trade uncertainties and outflows of nearly $900 million from investors this year. With deals on trade and a Thailand-Cambodia ceasefire in play, could this mark a turning point?
Why the underperformance? SEA stocks faced headwinds from U.S.-China tensions, supply chain shifts, and slower regional growth—Q2 GDP expansions were solid but uneven, with Vietnam leading at 8.2% while others grappled with tariff fears. Emerging markets overall rallied 11% in Q3, but SEA's MSCI index trails by over 5%, highlighting its vulnerability to global trade flows.
Trump's playbook here—brokering peace and securing commitments from Cambodia, Thailand, and Malaysia—echoes his first-term deal-making. Expect tariff exemptions or investment pacts to boost exports, potentially lifting currencies like the ringgit and baht by 2-3% short-term. This could catalyze a 5-7% rebound in SEA indices if U.S. engagement deepens.
Broader macro view: As EMs eye a "new normal" post-tariffs, SEA's low valuations (P/E around 12x) make it a buy for patient capital. But risks linger if China retaliates. What's your take—bullish on ASEAN recovery, or too early?
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