Chen Dingwu, founder and managing director of Capital Investment (ICAP, 5108, main board closed-end fund), believes that the US economy and stock market will experience a severe recession in the coming months, while the Malaysian economy and stock market will be "escorted" by the strong Chinese economy and the FTSE Bursa Malaysia KLCI is estimated to maintain a psychological level of 1600 points by the end of the year.
In support of the argument that the US economy will decline, Chen Dingwu today cited various indicators at a press conference, including the "Sahm Rule", purchasing manager index, and unemployment rate, which indicate that the US economy is already showing signs of recession.
In this situation, the impact will undoubtedly affect the world, and the close relationship between Malaysia and China can provide a buffer for the Malaysian economy and stock market. In the most ideal situation, the Malaysian stock market can still maintain 1600 points.
He explained that China is Malaysia's largest trading partner in the past 15 years, as well as the largest source of foreign direct investment (FDI), and also the second largest export market for Malaysia after Singapore.
When the US economy is in recession, overall demand in the US declines, and China, as a major exporter, will actively promote domestic demand to drive the overall economy.
Malaysia relies heavily on exports, with exports to ASEAN and Asia, especially China, accounting for 70% of total exports, while exports to the USA only account for 14%, so the impact of US exports is minimal.
Therefore, he believes that even if US demand drops and imports decrease, China, while vigorously stimulating domestic demand, can fill in the gap...