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 on August 3, 2018 in Singapore.
Mohd Rasfan | Afp | Getty Images
Maybank said Southeast Asian markets could see a turnaround in 2024 after losing some momentum last year due to cheap valuations and potentially high economic growth.
Better growth, rising exports, a rebound in manufacturing and better-than-expected outlook from Taiwan Semiconductor Manufacturing Company last week mean Southeast Asian markets are poised for a better year, said Thilan Wickramasinghe, head of Singapore research at Maybank investment banking group.
“Southeast Asia really is a bargain market in terms of valuations,” Wickramasinghe told CNBC's “Street Signs Asia.”
The MSCI Southeast Asia index fell just over 3% in 2023, compared with a rise of more than 20% in the broader MSCI World index, whose five largest constituents include U.S.-listed tech giants such as Apple and Microsoft.
MSCI's Southeast Asia index was trading at about 13.21 times its 12-month price-to-earnings ratio, compared with a forward P/E of 16.57 times for the MSCI World, according to MSCI data as of Dec. 29. Index.
The forward P/E ratio captures the value of an index based on the returns of its constituents.
Maybank's Wickramasinghe said even a potential U.S. recession would not dampen optimism for Southeast Asian markets, particularly Indonesia, Malaysia and Thailand, which are heavily driven by domestic consumption.
Other markets in the region are also expected to benefit from their 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 see a transfer to Southeast Asia… particularly in the AI race and the EV race… If you take the AI race.” That alone becomes a significant demand lead to chips.”
Wickramasinghe noted that Southeast Asian countries already have infrastructure in place to capitalize on the growing demand for chips compared to a country like India, which may need time to catch up.