ASEAN Locomotive speeds up

With a global contingency that is complex to say the least, Southeast Asia is one of the most attractive regions for international investors

Editorial by Alessio Piazza

A tourism boom, robust restart of domestic demand, wealth of raw materials and increasingly welcoming rules for international players. Southeast Asia is one of the most attractive regions for global investment. It was before, it is even more so in the current contingency, made even more complex by widespread inflation and unknowns about supply chains. Starting with energy. While global equities are struggling after the latest moves by the U.S. Federal Reserve, Southeast Asia's growth prospects in fact make the ASEAN region a favorite among investors. Bloomberg estimates that most major economies in the region are expected to grow by at least 5 percent in 2022, thanks to the lifting of restrictions imposed during the Covid-19 pandemic. And global funds have poured a net $2.4 billion into the region, not counting Singapore. According to the South China Morning Post, the composition of Southeast Asia's equity benchmarks, with a relatively high proportion of banking stocks, is also favorable amid rising global interest rates. While most global central banks have been forced to tighten fiscal policy to deal with rising inflation, driven in part by years of pandemic stimulus, the problem has been less acute in Southeast Asia. Indonesia, whose stock market is among the best performing in the world this year, only began raising rates in August. And, in general, rates are still much more affordable than in several other parts of the world. Malaysia has more than doubled its annual target for tourists following an above-estimated rebound in recent months, while Thailand expects to raise as much as $11 billion thanks to a sharp increase in foreign visitor arrivals in the second half of the year. But Indonesia is also accelerating and, most recently, has also attracted the attention of Saudi Arabia on its startups with a potential unicorn future. Not to mention Vietnam, which is becoming a manufacturing destination for more and more international giants. The ASEAN locomotive has restarted.