Malaysia, China stand out as Asia’s most resilient economies, says JP Morgan

 The head of JP Morgan Asia says that apart from Malaysia and China, most economies in the region appear vulnerable to energy shocks.

Malaysia’s strong energy export profile and disciplined policy framework provide the country with a buffer against external pressures, according to Rajiv Batra, the head of JP Morgan Asia. (Envato Elements pic)

KUALA LUMPUR:

 Investment banking group JP Morgan says Malaysia and China are emerging as relatively resilient economies in Asia amid intensifying global energy market volatility due to the ongoing conflict in West Asia.

The head of JP Morgan Asia, Rajiv Batra, told CNBC that beyond China and Malaysia, most economies in the region appear vulnerable to energy shocks.

He noted that Malaysia’s strength lies in its energy export profile and disciplined policy framework, which provide a buffer against external pressures.

“Malaysia’s fiscal deficit is very much well under control due to government policy, and inflation is not significantly high,” he said.

These factors help support not only the country’s equity markets but also its currency amid external pressures, he added.

For China, Rajiv noted that the country relies on imports for only 5% of its electricity generation, with the bulk of electricity generated domestically.

In addition, China maintains substantial strategic reserves and retains the ability to scale up alternative energy sources, including coal and renewables, if needed.

However, Rajiv warned that the broader outlook remains uncertain, stressing that global growth could come under pressure if geopolitical tensions continue to disrupt oil and gas supply chains – particularly through infrastructure damage and logistical delays.

For equity markets, Rajiv said the immediate impact is expected in energy-sensitive sectors such as consumer goods, utilities, and downstream industries.

However, he said, if the situation is prolonged, it could trigger a wider impact on financial, technology, telecommunications, and even healthcare.

Despite these risks, Rajiv noted that markets have yet to fully price in a worst-case scenario and are still pricing a “muddle-through” scenario at this juncture. - FMT