Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<ul>
<li>FX reserves, which had declined over 10% from Mar'22 to Oct'22, rebounded by 8.9% in Nov-Dec'22. Anwar's inclusive policies will likely induce a steady rebound in net capital inflows. </li>
<li>Base effects have facilitated 9.3%YoY real GDP growth in Q1-Q3 2022 led by strong private consumption and net exports; better growth cut the fiscal deficit to 4% of GDP YTD.    </li>
<li>Net foreign portfolio outflows averaged 1.75% of GDP since 2013. As FPI rebounds, and non-bumiputera businesses invest anew, Malaysia's real GDP will grow 6% despite the OECD recession in 2023.</li>
</ul>


FX reserves, which had declined over 10% from Mar'22 to Oct'22, rebounded by 8.9% in Nov-Dec'22. Anwar's inclusive policies will likely induce a steady rebound in net capital inflows. 
Base effects have facilitated 9.3%YoY real GDP growth in Q1-Q3 2022 led by strong private consumption and net exports; better growth cut the fiscal deficit to 4% of GDP YTD.    
Net foreign portfolio outflows averaged 1.75% of GDP since 2013. As FPI rebounds, and non-bumiputera businesses invest anew, Malaysia's real GDP will grow 6% despite the OECD recession in 2023.


Malaysia: Anwar Well-Positioned to Spur Economic Recovery as Capital Flows Back

Thematic (Sector/Industry)

<ul>
<li>We expect PH to win the 15th General Election, because it will win a majority of the seats in West Malaysia as the non-PH vote splits between UMNO and PN. </li>
<li>PH may fall short of a national majority because it competes with local parties (rather than aligning with any major ones) in Sabah-Sarawak, which may hold the final cards.</li>
<li>While that is our baseline scenario, if current polling holds, PH will comfortably form the government with Anwar as PM. Winners will be technology companies and Hong Leong group.</li>
</ul>


We expect PH to win the 15th General Election, because it will win a majority of the seats in West Malaysia as the non-PH vote splits between UMNO and PN. 
PH may fall short of a national majority because it competes with local parties (rather than aligning with any major ones) in Sabah-Sarawak, which may hold the final cards.
While that is our baseline scenario, if current polling holds, PH will comfortably form the government with Anwar as PM. Winners will be technology companies and Hong Leong group.


Malaysia: PH Is Stronger in West Malaysia, but Sabah-Sarawak May Hold Final Cards

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Of the six Malaysian banks screened, we keep value play CIMB, whose share price has positive momentum, and quality play Maybank on the buy list</li>
<li>Value pick CIMB has undemanding valuations whilst second from top in post-provision profitability; it has strong capital adequacy and its cost of risk is now more in line with peers</li>
<li>Quality pick Maybank also has relatively undemanding PE multiples and PBV ratio, as well as strong balance sheet credentials and improving returns</li>
</ul>


Of the six Malaysian banks screened, we keep value play CIMB, whose share price has positive momentum, and quality play Maybank on the buy list
Value pick CIMB has undemanding valuations whilst second from top in post-provision profitability; it has strong capital adequacy and its cost of risk is now more in line with peers
Quality pick Maybank also has relatively undemanding PE multiples and PBV ratio, as well as strong balance sheet credentials and improving returns


Malaysian Banks Screener; Stick with Value Pick CIMB and Maybank as the Quality Pick

<ul>
<li>The six Malaysian banks screen favourably on balance sheet and returns metrics to June 2022; we add CIMB to the buy list, keep RHB and we remove Maybank</li>
<li>We add CIMB with its positive post-provision return trends and further potential which combine constructively with CIMB’s undemanding valuations versus the peer group; its high NPL ratio is fully provisioned</li>
<li>We stick with RHB, with its attractive post-provision profitability and positive cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG</li>
</ul>


The six Malaysian banks screen favourably on balance sheet and returns metrics to June 2022; we add CIMB to the buy list, keep RHB and we remove Maybank
We add CIMB with its positive post-provision return trends and further potential which combine constructively with CIMB’s undemanding valuations versus the peer group; its high NPL ratio is fully provisioned
We stick with RHB, with its attractive post-provision profitability and positive cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG


Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

The remarkable political pact (MoU) signed between PM Ismail Sabri Yaakob and 4 leaders of the constituent parties of the PH opposition alliance ensures political and economic-policy stability until the end of July 2022. PH gained an assurance of political reforms (an anti-defection law, lowering the voting age to 18, greater representation in parliamentary committees and equal funding for opposition and ruling-party MPs) in exchange for its conditional pledge not to dislodge the government for nearly 11 months, and support the Budget for 2022. The pact does not contain any steps to counter the gerrymandering of constituencies that UMNO and BN have effected over the past five decades. And it says nothing about policies other than purely budgetary matters. The UMNO-PAS-Bersatu alliance (a pure Malay-Muslim ruling group) has since moved swiftly to exploit those loopholes -- by advancing a series of discriminatory steps that deepen the racist underpinnings of Malaysia's constitution (negotiated by the departing British in 1948-57). A key policy being advanced requires all freight-forwarding and logistics companies to be 51% Bumiputera owned by end-2021; this will have a severely negative impact on non-Muslim-owned companies big and small (with most conglomerates having a freight-forwarding unit, and numerous small-businesses being based on trucking and logistics).The 12th Malaysia Plan (tabled last month) includes a policy requiring that all Bumiputera companies only be sold to Bumiputeras. And the infamous RUU 355 legislation (enhancing the powers of Shariah Courts over criminal cases, and allowing them to use traditional Islamic punishments) is progressing rapidly under this government.  These 3 legislations may endear the UMNO-PAS alliance to Malays nationally. They are aimed at putting PH's leader Anwar Ibrahim on the spot, as (despite founding the Islamic students' movement ABIM in the 1970s) Anwar leads an explicitly multi-racial party (at the head of a genuinely multi-racial alliance) and has eloquently advocated a race-neutral Malaysia over the past decade. More enduringly, these policies (unless reversed by a future PH government) risk permanently alienating much of Malaysia's business community (who will then choose to invest outside Malaysia rather than within it, turning Malaysia increasingly into an economy of generally-inefficient GLCs and foreign-owned MNCs). Despite the appearance of policy stability from this pact, the policies of this government are permanently handicapping Malaysia and threaten its longer-term economic viability.

The remarkable political pact (MoU) signed between PM Ismail Sabri Yaakob and 4 leaders of the constituent parties of the PH opposition alliance ensures political and economic-policy stability until the end of July 2022. PH gained an assurance of political reforms (an anti-defection law, lowering the voting age to 18, greater representation in parliamentary committees and equal funding for opposition and ruling-party MPs) in exchange for its conditional pledge not to dislodge the government for nearly 11 months, and support the Budget for 2022. The pact does not contain any steps to counter the gerrymandering of constituencies that UMNO and BN have effected over the past five decades. And it says nothing about policies other than purely budgetary matters. The UMNO-PAS-Bersatu alliance (a pure Malay-Muslim ruling group) has since moved swiftly to exploit those loopholes -- by advancing a series of discriminatory steps that deepen the racist underpinnings of Malaysia's constitution (negotiated by the departing British in 1948-57). A key policy being advanced requires all freight-forwarding and logistics companies to be 51% Bumiputera owned by end-2021; this will have a severely negative impact on non-Muslim-owned companies big and small (with most conglomerates having a freight-forwarding unit, and numerous small-businesses being based on trucking and logistics).The 12th Malaysia Plan (tabled last month) includes a policy requiring that all Bumiputera companies only be sold to Bumiputeras. And the infamous RUU 355 legislation (enhancing the powers of Shariah Courts over criminal cases, and allowing them to use traditional Islamic punishments) is progressing rapidly under this government.  These 3 legislations may endear the UMNO-PAS alliance to Malays nationally. They are aimed at putting PH's leader Anwar Ibrahim on the spot, as (despite founding the Islamic students' movement ABIM in the 1970s) Anwar leads an explicitly multi-racial party (at the head of a genuinely multi-racial alliance) and has eloquently advocated a race-neutral Malaysia over the past decade. More enduringly, these policies (unless reversed by a future PH government) risk permanently alienating much of Malaysia's business community (who will then choose to invest outside Malaysia rather than within it, turning Malaysia increasingly into an economy of generally-inefficient GLCs and foreign-owned MNCs). Despite the appearance of policy stability from this pact, the policies of this government are permanently handicapping Malaysia and threaten its longer-term economic viability.          

Malaysia: Stability Paves Way for Better Policy; UMNO-PAS Long-Term Challenge

Malaysia

Hong Leong Bank Berhad provides commercial banking and related financial services.  The Company's services include leasing and hire purchase, nominee, Islamic Banking, and unit trust management.  Through its subsidiaries, the Company also develops and invests in real estate.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Hong Leong Bank (HLBK MK)

Malaysia: Anwar Well-Positioned to Spur Economic Recovery as Capital Flows Back

FX reserves & MYR have rebounded since Anwar became PM. Non-bumi businesses which were investing outside Malaysia since 2000 are set to return,...

Prasenjit K. Basu

Malaysia: PH Is Stronger in West Malaysia, but Sabah-Sarawak May Hold Final Cards

Anwar Ibrahim will be PM by the end of November. PH will win west Malaysia comfortably, but may fall short nationally because of Borneo states....

Prasenjit K. Basu

Malaysian Banks Screener; Stick with Value Pick CIMB and Maybank as the Quality Pick

Value play CIMB and quality play Maybank are top picks among Malaysian banks, both with strong financials and positive momentum in share price....

Victor Galliano

Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

We add CIMB to the buy list, keep RHB and we remove Maybank; CIMB has positive post-provision return trends and undemanding valuations; RHB has...

Victor Galliano

Malaysia: Stability Paves Way for Better Policy; UMNO-PAS Long-Term Challenge

MoU between PM and opposition PH (13 Sept) provides stability in exchange for political reform. But UMNO-PAS are using it to advance Malay...

Prasenjit K. Basu

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Malaysia: Anwar Well-Positioned to Spur Economic Recovery as Capital Flows Back

FX reserves & MYR have rebounded since Anwar became PM. Non-bumi businesses which were investing outside Malaysia since 2000 are set to return,...

Prasenjit K. Basu

Malaysia: PH Is Stronger in West Malaysia, but Sabah-Sarawak May Hold Final Cards

Anwar Ibrahim will be PM by the end of November. PH will win west Malaysia comfortably, but may fall short nationally because of Borneo states....

Prasenjit K. Basu

Malaysian Banks Screener; Stick with Value Pick CIMB and Maybank as the Quality Pick

​Value play CIMB and quality play Maybank are top picks among Malaysian banks, both with strong financials and positive momentum in share price....

Victor Galliano

Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

We add CIMB to the buy list, keep RHB and we remove Maybank; CIMB has positive post-provision return trends and undemanding valuations; RHB has...

Victor Galliano

Malaysia: Stability Paves Way for Better Policy; UMNO-PAS Long-Term Challenge

MoU between PM and opposition PH (13 Sept) provides stability in exchange for political reform. But UMNO-PAS are using it to advance Malay...

Prasenjit K. Basu

Value play CIMB and quality play Maybank are top picks among Malaysian banks, both with strong financials and positive momentum in share price....