EASING TENSIONS BOLSTER OUTLOOK

MAYBANK SECURITIES THAILAND

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Global investor sentiment has improved following an easing of US-China trade tensions after talks on Wednesday between presidents Donald Trump and Xi Jinping.

The 10% reduction of the “fentanyl tariff” on Chinese goods is good news for Beijing as well as US consumers.

Meanwhile, a September US inflation figure of 3%, slightly below market expectations of 3.1%, paved the way for the Federal Reserve to cut its benchmark interest rate by another 25 basis points (bps) to a range of 3.75% to 4.00% at its October meeting. We expect another cut of 25bps in December.

In addition, 86% of the S&P 500 companies that have reported quarterly earnings have exceeded expectations by 7.7%, the highest level in the past four quarters, supporting record-high index readings.

We expect global equity markets will perform well in November based on lower trade tensions, reduced geopolitical risks and earnings upgrades. We maintain our overweight rating on the US, China and India markets.

In Southeast Asia, equity markets showed resilience amid global volatility in October, with the MSCI Asean Index up 1.2% for the month, bringing year-to-date returns to 10%.

The highlight for the month continues to be Vietnam, as the much-anticipated FTSE Emerging Markets upgrade materialised, which will open the country's bourse to more foreign funds.