Maybank in its regional market outlook is upgrading Indonesia to Overweight adding that a volatile Rupiah and uncertainties around President-elect Prabowo's strategies to boost growth have weighed on the market, with the LQ45 index now trading on just 12x forward PER, which is -2 standard deviations below 10yr average of 16.6x and the lowest level since May 2020.

The house also remains Overweight "middle income trap" Malaysia and Thailand, while flagging stock ideas in Neutral-rated Singapore, Indonesia, Philippines and Vietnam. By-country sector valuation ranges, active funds Overweights/Underweights and MIBG Quants.

ASEAN Tactical Market Highlights
Overweight: Indonesia is the second worst performing ASEAN benchmark YTD after Thailand, with blue chips appearing overly-discounted. Catalysts include FX stability, helped by US rate cuts, and policy clarity re fiscal step-up and further industrialisation, with positive read through for commodity and consumer sectors. ID Quants: continue to prefer Value, Low Volatility factor styles.

Malaysia has absorbed post-2Q24 profit-taking well, with continuing policy execution (e.g. diesel subsidy cuts) and sustained tech/data center(DC)- centric FDI / construction newsflow lifting sentiment. Details on the JB-SG SEZ, petrol subsidy rollback are key lookouts for 2H24. MY Quants: Momentum dominant but Low Volatility factor style seeing hedging interest.

Recent bout of political noise/court cases in Thailand expected to settle down by end-July; key thematics are infrastructure/budget, tourism and margin expansion. TH Quants: still prefer Quality factor style.

Neutral: Expect some fund flow rotation back to defensive Singapore given moderated US rate cut expectations that keeps Banks in play but likely delaying recovery re REITs; also favour O&G services and telco/DC-centric spend/restructuring. SG Quants: Growth and Momentum styles are performing/preferred.

Fiscal measures to moderate rice and electricity prices in the Philippines will moderate inflation and support consumption, benefitting consumer/retail picks; also BLOOM PM on rising gaming traffic. Vietnam's strong 2Q24 GDP growth underscores positive market earnings momentum notwithstanding lingering FX pressures / interest rate overhangs; besides macro/market upgrade-proxy banks, 2Q24 is expected to see earnings outperformance re steel, tech, O&G/RE, consumer.