KUALA LUMPUR (Jan 25): The withdrawal of the United States under president Donald Trump from the Trans-Pacific Partnership agreement (TPP) will not have a huge negative impact on the Malaysian market, according to Eastspring Investments.

“The economic benefits have not been priced into the market and it has been widely expected by the market for Trump to scrap off the TPP. It also doesn’t impact trade barriers too much either as it’s an agreement involving 12 countries and not Malaysia-US alone. The impact without TPP is not as profound as what some people might think,” Rudie Chan, the chief investment officer of Eastspring Investments Bhd said during a market outlook 2017 briefing.

He added that while U.S. trade still matters to Malaysia, there is a growing prominence of trades with Asia and China.

Robert Rountree, global strategist of Eastspring Investments (Singapore) Ltd also shared that as most of the Asian economies including Malaysia have been domestically driven, the impact from the strength in the dollar and the failed TPP will not be significant.

“It’s easy to focus on TPP as compared to the extremely cheap currency in the Malaysian Ringgit. The cheap currency and valuation of the Malaysian market could see a reversal, when the confidence level returns and that impact has yet to really kick in and the impact could be much more dramatic,” Roundtree said.

He added that fears of a strong dollar have hindered the rally in the Asian equities, but it could also be the cause for an extremely cheap valuation.

With Trump’s twin deficit policy, the strength of the U.S. dollar could be short-lived and any reversals of that could see a sharp rebound for the Asian equities, Rountree added.