Nomura: M’sia 4th biggest beneficiary of trade war

Nomura: M’sia 4th biggest beneficiary of trade war
Wednesday, 5 Jun 2019

by ganeshwaran kana



Profiting from the trade war: Westport in Port Klang. Nomura Research has pointed out Malaysia’s E&E sector was the country’s top beneficiary of the tariffs imposed by the US on China.


PETALING JAYA: The Malaysian electrical and electronics (E&E) sector, as well as natural gas, were among the biggest beneficiaries of the ongoing trade war between the world’s two largest economic juggernauts.Nomura Research said in a recent report that the gains made by the two sectors due to trade diversions from the US and China were the key reasons that made Malaysia the fourth biggest beneficiary of the US-China trade war.

The Japanese brokerage firm pointed out Malaysia’s E&E sector was the country’s top beneficiary of the tariffs imposed by the US on China.


The gains was particularly seen in the production of integrated circuits (0.2% of GDP) as well as semiconductor devices and light-emitting diodes (0.2% of GDP).

Meanwhile, as a result of China’s tariff on the US, the key Malaysian products that benefited from the trade war were waste and scrap alloy (0.4% of GDP), natural gas (0.3% of GDP) and benzole (0.3% of GDP).





This was because the remaining US$300bil of imports from China largely comprised of electronic products.

Speaking with StarBiz, an analyst said that the Malaysian companies in the semiconductor and chip-related industries are expected to see a stronger demand for their products due to the trade diversion from China and the US.

Among such companies are Inari Amertron Bhd

image: https://cdn.thestar.com.my/Themes/img/chart.png, Frontken Corp Bhd

image: https://cdn.thestar.com.my/Themes/img/chart.png, Globetronics Technology Bhd

image: https://cdn.thestar.com.my/Themes/img/chart.png, Malaysian Pacific Industries

image: https://cdn.thestar.com.my/Themes/img/chart.png Bhd, Elsoft Research Bhd

image: https://cdn.thestar.com.my/Themes/img/chart.png and Vitrox Corp Bhd

image: https://cdn.thestar.com.my/Themes/img/chart.png. “The gains from the trade war will not be permanent. In the short-term, Malaysia and other countries will benefit from it.



“However, in the long run, everyone loses,” he said.

Malaysia emerged as the fourth largest beneficiary of the US-China trade war, gaining an additional 1.3% of its gross domestic product (GDP) due to trade diversions from the world’s two biggest economic juggernauts.

According to Nomura Research, it was estimated that Malaysia’s gains from the trade spat have exceeded the gains made by several other key Asian economies such as Hong Kong, South Korea and Singapore.

Vietnam is the largest beneficiary from the US-China trade war and gained 7.9% of GDP from trade diversion, followed by Taiwan (2.1%), Chile (1.5%), Malaysia (1.3%) and Argentina (1.2%).

“Our study covers US tariffs on US$250bil worth of imports from China and Chinese tariffs on US$110bil worth of imports from the US.

“Based on these criteria, we find evidence of US and China import substitution in 52% of the 1,981 tariffed products.

“US tariffs on China has resulted in US import substitution in mostly electronic products, followed by furniture and travel goods. China’s tariffs on the US have resulted in China import substitution mostly in soybeans, aircraft, grains and cotton,” stated Nomura Research.

The report’s findings showed that China has lost 0.5% of its GDP due to trade diversions, while the US lost 0.3% of its GDP.


Read more at https://www.thestar.com.my/business/business-news/2019/06/05/nomura-msia-4th-biggest-beneficiary-of-trade-war/#4YhWpoBgdTkXaSWg.99