KUALA LUMPUR: Malaysia could reap significant benefits from Donald Trump's reelection as US president, particularly through his proposed trade and tariff policies, according to CIMB Securities Sdn Bhd.
While Trump's agenda may disrupt global trade flows, Malaysia's position as a manufacturing and supply chain hub makes it well-placed to gain from trade diversions and increased foreign investment, it said.
"Malaysia is expected to capitalise on Trump's renewed focus on tariffs and trade restrictions, particularly through the China Plus One strategy," the firm said.
"Companies seeking alternatives to China will continue to view Malaysia as an attractive destination due to its competitive infrastructure and lower production costs."
The firm pointed to historical trends, citing Malaysia's success during Trump's first presidency.
During the 2018 US-China trade war, Malaysia recorded a 47.2 per cent increase in approved foreign direct investment (FDI), including a 411 per cent surge from China and a 738 per cent rise from the US.
"The positive gains in combined trade balance with the US and China, by +1.3 per cent of GDP (gross domestic product) between 2017 and 2023, underscore the capture of value-added production in the country," it said.
"Amid the looming US-China trade war 2.0, Malaysia's terms of trade, measuring the relative prices of exports to imports are set to improve, driven by trade diversion and export recovery.
"Building on gains during the first Trump presidency, Malaysia is expected to capitalise on shifts in key sectors such as electronics, chemicals, and palm oil," it added.
CIMB Securities said that Malaysia's economy remains resilient and well-positioned for growth.
"We expect Malaysia's GDP to grow at 5.0 per cent in 2025, supported by strong domestic spending and the ongoing global technology recovery," it added.
Malaysia's electronics and electrical (E&E) sector, a key player in the global semiconductor supply chain, is expected to see continued momentum as global semiconductor sales recover.
While Trump's policies could drive inflation in the US and cause volatility for emerging market currencies, CIMB Securities remains optimistic.
"Despite external uncertainties, Malaysia's diversified economy, supported by strong private consumption and robust investment activity, is set to sustain its growth trajectory,'" the firm said.
CIMB Securities concluded that Malaysia's strategic positioning and ability to adapt to global trade shifts make it a clear winner amid Trump's potential reelection.
"Malaysia's integration into global supply chains and its status as a preferred manufacturing hub in ASEAN will allow it to leverage trade diversions and strengthen its economic growth."