A woman (right) adjusts the Philippine flag before the 51st Ministerial Meeting of the Association of Southeast Asian Nations (ASEAN) and the Republic of Korea in Singapore on August 3, 2018.
Muhammad Rasfan | AFP | Getty Images
Southeast Asian markets could see a turnaround in 2024 on the back of cheap valuations and potentially higher economic growth, after losing some momentum last year, according to Maybank.
Improving growth, rising exports, a rebound in manufacturing and a better-than-expected outlook from Taiwan Semiconductor Manufacturing Company last week all mean Southeast Asian markets are poised for a better year, said Thilan Wickramasinghe, head of Singapore research at Maybank. Investment Banking Group.
“Southeast Asia is actually a market vault when it comes to valuations“,” Wickramasinghe told CNBC's “Street Signs Asia.”
The MSCI Southeast Asia Index fell just over 3% in 2023, compared with a more than 20% rise in the broader MSCI World Index, whose five largest components are US-listed technology giants including Apple and Microsoft.
The MSCI Southeast Asia Index traded at about 13.21 times its forward 12-month price-to-earnings ratio, according to Data from MSCIAs of December 29, compared to a forward P/E of 16.57 times for the MSCI World Index.
Forward P/E captures the value of an index based on the earnings of its components.
Even a potential US recession would not dampen optimism in Southeast Asian markets, especially in Indonesia, Malaysia and Thailand, which are strongly led by domestic consumption, said Maybank's Wickramasinghe.
Other markets in the region are also positioned to benefit from its growing presence in the chip and electric vehicle industries.
“That's because the pie is actually getting bigger, and a lot of Chinese capacity is actually going to start seeing a move to Southeast Asia… especially with the AI race and the electric car race… If you take the AI race alone, that's going to drive up demand for chips. “
Wickramasinghe noted that Southeast Asian countries already have the infrastructure in place to take advantage of the growing demand for chips compared to a country like India, which may need time to catch up.
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