The United States (US) and China’s 90-day trade war truce to resolve their differences over trade is a positive move and eases concerns over the impact on the country’s economy.
Global stock market and currencies boosted to their highest in roughly three weeks since Monday following a positive response to the decisions made by both of the world’s largest economies, with market observers saying ‘delayed some of the worst-case scenarios in trade relations.’
Bank Islam Malaysia Bhd’s chief economist Dr Mohd Afzanizam Abdul Rashid said the 90-day temporary trade halt period was crucial for further discussions to be carried out by the two countries to find solutions.
Hence, the 90-day period will be observed by the market to see how far the “midpoint” will be achieved, especially on issues related to intellectual property, technology transfer and security-related issues as previously raised by the US.
He said a study by Bank Negara Malaysia (BNM) found that trade war between the US and China would have a negative impact on the global economy.
“Malaysia as a country with open economy from the perspective of trade and the capital market will be affected if the conflict continues.
“Therefore, this “trade halt” should provide relief to the Malaysian economy,” he said in commenting on the latest US and China measures in resolving trade war between the two countries.
Meanwhile, Malaysian Institute of Economic Research (MIER) senior researcher fellow Dr Zulkiply Omar said the US and China measures will only avoid further tariff imposition.
Hence, he said the existing tariffs will continue.
“The effect will be to promote world trade which will also have a positive effect on the country’s exports,” he said.
MIDF Research said the US and China measures to temporarily stop the trade war might help generate the necessary support to stimulate the equity market in the near future.
The research firm maintained its final projection for 2018 for the local stock market benchmark index at 1,800 points.
