Malaysia & Thailand Can Cushion The Blows Of The Global Economy

KUALA LUMPUR, Dec 20 (Bernama) -- Both Malaysia and Thailand face higher risks in the present uncertain global economic climate due to their export-driven economies but solid balance sheet positions and policies would offer them some cushion, says HSBC Global Research. Its Chief Economist for India and Asean, Leif Eskesen said solid domestic demand, underpinned by favourable labour markets and easy monetary conditions, was still supporting retail sales. "However, it's not enough to look at exposure to the US and Europe. China is becoming an increasingly important export destination," he said in the Asean Perspectives Vulnerability Scorecard report released on Tuesday. Shipments have benefitted from China's seemingly insatiable appetite for commodities, which got a second wind from the massive policy stimulus in the aftermath of the 2008-09 global financial crisis. This has, in particular, helped commodity exporting countries like Indonesia and Malaysia, Eskesen said. On monetary policy, he said Malaysia and Thailand have been more proactive than the other countries in the region in normalising monetary policy settings. "This leaves them with more room to cut policy rates if needed and we expect Thailand and Malaysia to stand out as the most vulnerable in the event of another global recession," he said. In another development, Citigroup Global Markets expects the heavy fund outflows this year to have no impact on its positive views on emerging market equities for 2012. Indeed, the scale of the recent outflows, the average cash weights and magnitude of the EM underweight in global funds all confirm the lousy sentiment on EM equities and suggest considerable scope for positive surprises, it said. Citigroup research note also revealed that emerging markets equity funds have suffered net outflows of US$41.2 billion so far this year, the second worst year ever after 2008 which recorded US$49.5 billion. In absolute terms, Asian funds have suffered the biggest outflows this year at US$20.6 billion, followed by Latin American (US$10.3 billion) and Europe, Middle East and Africa (US$5.9 billion) funds. -- BERNAMA Malaysia