At first glance, it may seem as though Malaysia has been relatively unaffected by Covid-19 (particularly when compared to western countries like the UK and the US). To this end, 8,643 cases have been recorded in the Southeast nation to date, with 121 of these resulting in fatality.
However the pandemic and associated lockdown measures have taken a socio-economic toll in Malaysia, with the nation’s influential tourism sector particularly hard-hit.
In this post, we’ll appraise this impact in further detail, while asking how the government can lead an economic recovery and creating exciting opportunities for investors within the digital realm.
How has Coronavirus Impacted on Malaysia and the Economy?
In purely financial terms, the first quarter of 2020 saw the Covid-19 outbreak wreak havoc on the Malaysian economy, reducing forecasted growth to a level of just 0.7%.
A further contraction has followed in Q2, although this is expected to represent a turning point in the nation with several areas of the existing economy having now reopened for business.
At the same time, the thriving tourism sector has been decimated by Covid-19 and lockdown measures, declining by a whopping 41.5% during Q1 in relation to the corresponding figures from 2019.
Per capita expenditure in Malaysia showed an associated decline of 7.4% during the same period, reducing the amount reinvested into the national economy and reducing the government’s capacity to spend.
This particular issue has been compounded by the roll out of three economic stimulus packages totalling RM295 billion, which represents a huge quantitative easing measure and one that’s far larger than anything witnessed before in the region.
With the banking institutions also contributing to the economic stimulus measures, the impact of this increased borrowing will also be felt by households (namely in the form of reduced savings rates and rising inflation).
Have New Investment Opportunities Emerged Online?
Interestingly, the Malaysian economy has followed the example of Vietnam by investing heavily in domestic tourism in the wake of the coronavirus pandemic, creating a scenario where economic activity can be optimised in the near-term.
This highlights how a change in approach can help the nation to drive its economic recovery over time, and there’s no doubt that new investment opportunities have emerged following the outbreak.
This not only applies to blue-chip stocks that may have been devalued as a result of Covid-19, but it also enables forex traders to profit by hedging against the Malaysian ringgit.
The plight of this currency has been compounded by the aforementioned stimulus measures, with the ringgit classed as being amongst the worst-performing Asian currencies so far in 2020.
The ringgit has also suffered from declining oil prices, making it vulnerable to declines beyond its 4.23-4.25 USD support level. So, speculating on further declines against the greenback and trigger sustained profits in the current climate.
Investors may also want to target ecommerce brands and markets, with the rate of online shopping having increased incrementally during Q1 and Q2 across the globe.
Make no mistake; some companies have witnessed online sales increases of 43% during the first half of 2020 to date, with growth in excess of 60% during the second quarter alone. This trend is expected to continue in the near-term, as shoppers remain inclined to spend increased amounts online and the threat of additional or regional lockdowns remaining prominent across the globe.