Global investors are turning to Southeast Asia as a safe haven from uncertainty surrounding US trade policies, boosting the region's stock market outlook. Analysts predict a shift in global supply chains and investment towards Southeast Asia due to US tariffs on China.
Global investors are looking to Southeast Asia for some shelter as they brace for uncertainties surrounding Donald Trump’s trade policies, boosting prospects for the region’s stocks in the coming year. The US president-elect’s targeted tariff plan for China is likely to accelerate a shift in global supply chains and foreign direct investment that may favor the region, analysts said.
Meanwhile, economies with less trade exposure may fare better on growth, and domestic spending in some markets is anticipated to be robust. While the regional benchmark MSCI Asean Index has slightly underperformed the wider Asia gauge this year, and most countries are seeing foreign outflows, funds are betting that investors will return next year. More investments into the region’s infrastructure and budding sectors, including data centers and green energy, will bode well for corporate profit growth. “Domestically driven markets like Indonesia and the Philippines stand out for their relative stability, supported by strong consumption and policy flexibility,” making them well-positioned as stable options for investors, said Mohit Mirpuri, an analyst at SGMC Capital Pte. The MSCI Asean gauge has gained 7.7 percent this year. The measure may rise as much as 14 percent to 780 by the end of 2025 from Wednesday’s close if a bullish scenario emerges, according to JPMorgan Chase & Co.’s estimates. Global funds have sold stocks in Malaysia, Philippines, Thailand and Vietnam on a net basis this year. But the outlook for foreign flows may improve as the region will benefit “tremendously” from spillover effects of the US-China tension, said Vicki Chi, a portfolio manager for Asian equities at Robeco Hong Kong Ltd, who remains overweight on Asean markets. Developing Asean banks, whose net interest margins are seen as more independent from global interest rate moves, and information technology-related shares are among Chi’s main pick
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