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Banking in Singapore and Malaysia


Singapore and Malaysia are two of the most important economies in South East Asia. Measured by Gross Domestic Product (GDP), Malaysia is the 36th largest economy in the world, whilst Singapore is the 39th largest. But what is the current outlook for the economies and their banking sectors?

Singapore Malaysia

We take a brief look at their economic outlook and consider what is driving the performance of the banking sectors in both countries. We consider the impact of important macroeconomic factors including global issues and compare the two countries on economic fundamentals. We also delve into more country specific issues, such as the impact of Shariah law, the outlook of credit ratings agencies and how these are affecting economic performance.

 

MACROECONOMIC IMPACT –  Slowdown in China

The economic restructuring and subsequent slowdown in China has been impacting significantly on global market, with Emerging Asian economies so closely tied to the prospects of Chinese growth, this has created some significant issues. The prospect of a “hard landing” in China is still a major concern for economic growth in the region and one which could have a negative impact on its banks.

China is currently undergoing a massive economic re-structuring away from the high growth, high investment, export driven, capital intensive economy; towards a lower growth, more sustainable, consumption driven economic model. Having seen several years of double digit economic growth, GDP expansion is slowing. As recently as 2010, Chinese growth was up around 12%, however, annual GDP growth is set to fall below 7% this year and in Q2 was back to 6.7%.

Current expectations are that China will manage to avoid a hard landing (seen as a drop back to near zero growth). As a comparison, Japan and South Korea have previously been on similar paths of rapid growth and subsequent slowdown. Both were achieving almost double digit growth during highly industrialized periods before

 

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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.