US-China trade war will hurt Asia, including Malaysia
KUALA LUMPUR: Exportdriven Asian economies such as Malaysia could be affected if a full-blown trade war between the US and China were to take place, United Overseas Bank ( Malaysia) Bhd economist Julia Goh said.
“For Malaysia and any exporting nation, you are caught in between if trade tension does escalates. No one is spared, especially the more open Asian countries that are quite widely exposed to trade,” she said.
China and the US contribute 25 per cent of the country’s total trade. Last week, US President Donald Trump signed a presidential memorandum that could impose tariffs of up to US$ 60 billion on imports from China and restrictions aimed at preventing Chinese- controlled companies and funds from acquiring US firms with sensitive technologies.
Asian stock market got jittery with the news with Bursa Malaysia’s benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) opening 11.26 points lower at 1,853.96 from Friday’s close of 1,865.22. It was weighed down by losses across the board amid uncertainty in the face of an escalating US- China trade war.
At 3.41pm, the Index bounced back to 1,860.45, down 4.77 points.
Goh said that the impact would not just be confined to Asia, as the US trade tariffs introduction and the possible proliferation of further protectionist trade policies could eventually impact global exports and trade activities as well.
“If global trade relations deteriorate dramatically, the results could be a stronger US dollar as investors move to safe haven assets,” she added.
On foreign direct investment ( FDI), Goh said Malaysia is expected to receive more investments after the forthcoming 14th general election, barring unexpected outcome.
“Fundamentally, domestic conditions are still stable. We are seeing gross domestic product growth rising to three years high last year and the ringgit has stabilised and strengthened.
“I think generally, we should be expecting more FDI and portfolio investment coming in after the election, assuming (there are) no surprises,” she said. — Bernama