News > Capital Markets

Vietnam, Malaysia may be the TPP’s biggest beneficiaries: Credit Suisse

By ValueWalk
Capital Markets

Who is the biggest winner of the TPP deal? If you guessed the US middle class... you were wrong

The biggest beneficiaries from the Trans Pacific Partnership struck on Oct. 5, are expected to be Vietnam and Malaysia, while the impact on non-TPP Asian countries is likely to be slightly negative, believes Credit Suisse Group AG (ADR) (NYSE:CS) analyst Michael Wan. He said in his Oct. 7 research report on “Asia Economics” that he thinks the manufacturing sector will be the biggest beneficiary from the TPP.
Vietnam could witness a 10% boost to GDP by 2025
Wan terms the TPP a historic agreement, as after almost seven years of negotiations, the U.S., Japan and 10 Pacific Rim countries finally came to an agreement. The analyst points out that if the trade agreement is ratified through the various countries’ parliaments and implemented, it will cover 40% of global output and aim to eliminate over 18,000 tariffs.

In another report from CS published jointly by Dan Fineman and Chate Benechavitvilai, the analysts say that most likely, Vietnam is the top winner in Asia from the TPP. Though details on the agreement are currently lacking, the analysts anticipate that the biggest gains for textiles, garments and footwear exports to the U.S. could lead to shifts in production from China and Thailand. Citing estimates from the Peterson Institute, the analysts point out that the TPP could boost Vietnam’s GDP by 10% by 2025-- twice as much as is estimated for any other Asian market.

Fineman and colleague point out that the key problem for investors is the lack of large and /or liquid stock that directly benefits from the TPP. However, the analysts point out that given the overall positive impact on the economy, the agreement could also have a spill-over effect on some sectors, including banks, consumer and property. Within their Vietnam coverage, the Credit Suisse analysts maintain their Outperform rating on Vinamilk (consumer) and Vingroup (property).

Malaysia’s GDP could see 5% boost

Tan Ting Min of Credit Suisse believes the TPP is generally positive for Malaysia as the country is very dependent on trade, and the TPPA will open up four new markets to Malaysia: the U.S., Canada, Mexico and Peru. Min believes the TPPA is positive for Malaysia in the long term, though the analyst doesn’t envisage benefits until 2018, assuming the Cabinet approves it. The CS analyst also thinks export industries in Malaysia such as plantations, electronics, textile, automotive parts and

Subscribe to our Newsletter

Be one of the first to experience the future of financial services