Malaysian assets to gain as funds slash US exposure: CIMB

[KUALA LUMPUR] Malaysia could end up among the biggest beneficiaries in emerging markets if the Trump administration's disruptive trade policies trigger a further sell-off in US assets, according to a top executive at CIMB Group Holdings.
'We could potentially see a lot of capital freed up and move to emerging markets,' Novan Amirudin, chief executive officer of CIMB, Malaysia's third-largest bank by market value, said.
'Malaysia has all the parameters that tick the boxes for investors as they look at asset allocation and investments,' he said.
Uncertainty over US fiscal and trade policy is denting the appeal of US assets, with emerging market investors expecting the asset class to benefit as some of that cash finds its way into stocks and bonds of developing countries.
Global funds bought US$45.6 million of Malaysian equities so far this quarter, making the country the only emerging South-east Asian nation to see inflows, according to Bloomberg-compiled data.
Novan pointed to Malaysia's political stability and the government's commitment to improving the country's fiscal position as key factors that make the nation stand out. Since taking over as Prime Minister in late 2022, Anwar Ibrahim has accelerated economic and political reforms after a revolving door of leaders from 2018 to 2022 affected investor confidence.
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While Malaysia's economic expansion is expected to come in slightly lower than the 4.5 to 5.5 per cent official growth estimate for the year, strong domestic demand is likely to anchor growth. And though the country kept borrowing costs unchanged earlier in May, traders are pricing in an interest rate cut within the next six months.
Bank Negara Malaysia has 'always been very proactive', said Novan, who took charge at CIMB in 2024.
He said the government's policies on energy transition, manufacturing and the semiconductor industry would draw more foreign investments. Technology giants including Microsoft and Amazon.com have pledged to invest billions of US dollars in the country's infrastructure, with Malaysia approving a record amount of investments last year.
A planned special economic zone with Singapore will also help 'mitigate uncertainties that a lot of businesses and corporations are seeing today', Novan said. BLOOMBERG

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The officials spoke on condition of anonymity because they were not authorised to speak publicly. Iran has vowed that if attacked by US forces, it would respond forcefully, potentially setting off a cycle of escalation. 'Think about what happened in January 2020 after Trump killed Soleimani and times that by 100,' said senior fellow at the Middle East Institute Brian Katulis . A powerful Iranian general, Qassem Soleimani, was killed in a US drone strike in Baghdad during Mr Trump's first administration. Iran then launched the largest-ever ballistic missile barrage at US bases in Iraq, leaving some 110 troops with traumatic brain injuries and unintentionally hitting a Ukrainian passenger jet, killing all 176 people aboard. 'Iran is strategically weaker but operationally still lethal across the region,' Mr Katulis said, 'and Americans still have troops across that part of the world.' Iran has mined the Strait of Hormuz before, including in 1988 during its war with Iraq, when Iran planted 150 mines in the strait. One of the mines struck a US guided missile frigate, the USS Samuel B. Roberts, nearly sinking it. General Joseph Votel, a former leader of U.S. Central Command, and Vice-Admiral Kevin M. Donegan, a former commander of US naval forces in the Middle East, each said on June 18 that Iran was capable of mining the strait, which they said could bring international pressure on Israel to end its bombing campaign. But such an action would probably invite a major US military response and further damage Iran's already crippled economy, Vice-Admiral Donegan added. 'Mining also hurts Iran; they would lose income from oil they sell to China,' he said. 'Now, though, Iranian leadership is much more concerned with regime survival, which will drive their decisions.' 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Much is at stake for Iran if it decides to retaliate. 'Many of Iran's options are the strategic equivalent of a suicide bombing,' said Mr Karim Sadjadpour, an Iran policy expert at the Carnegie Endowment for International Peace. 'They can do enormous damage to others if they mine the Strait of Hormuz, destroy regional oil facilities and rain a missile barrage against Israel, but they may not survive the blowback.' But Iran can make it hugely expensive and dangerous for the US Navy to have to conduct what would most likely be a weeks-long mine-clearing operation in the Strait of Hormuz, according to one former naval officer who was stationed on a minesweeper in the Persian Gulf. He and other navy officers said that clearing the strait could also put American sailors directly in harm's way. Iran is believed to maintain a variety of naval mines. They include small limpet mines containing just a few pounds of explosives that swimmers place directly on a ship's hull and typically detonate after a set amount of time. Iran also has larger moored mines that float just under the water's surface, releasing 100 pounds of explosive force or more when they come in contact with an unsuspecting ship. More advanced 'bottom' mines sit on the seafloor. They use a combination of sensors – such as magnetic, acoustic, pressure and seismic – to determine when a ship is nearby and explode with hundreds of pounds of explosive force. The Navy has four minesweepers in the Persian Gulf, each with 100 sailors aboard who have been based in Bahrain and are trained to deal with underwater hazards. Should Iran place mines in the Strait of Hormuz or other parts of the Persian Gulf, a small navy contingent in Bahrain called Task Force 56 would respond. Usually led by a senior explosive ordnance disposal officer, the task force would take advantage of technologies like autonomous underwater vehicles that can scan the seafloor with sonar much more quickly than the last time Iranian mines threatened the strait. And while the navy has been experimenting with underwater robots to destroy mines, the task force will still need to deploy small teams of explosive ordnance disposal divers for the time-consuming and dangerous task of approaching each mine underwater and carefully placing charges to destroy it. NYTIMES Join ST's Telegram channel and get the latest breaking news delivered to you.