Trump's Victory: Effects on Malaysian Financial Market and Economy

This report examines the impact of Donald Trump's victory on the Malaysian financial market and economy. It analyzes the effects of the Trump administration's policies, particularly the potential withdrawal from the Trans-Pacific Partnership Agreement (TPPA), on Malaysia's trade, foreign investment, and currency value. The report discusses the implications of trade imbalances, decreased exports, and the decline in the value of the Malaysian Ringgit. It further explores the uncertainty in the stock market due to reduced foreign institutional investment (FII) inflow and the pressure on the forex market. The analysis draws on various sources, including academic journals and online resources, to assess the potential economic consequences for Malaysia, including the potential for decreased economic growth, decline in domestic demand, and impacts on the financial institutions. The report highlights the interconnectedness of global markets and the potential impact of political decisions on national economies.

FINANCIAL MARKET

Table of Contents
Trump victory impacts on Malaysian market and their economy.........................................3
REFERENCES................................................................................................................................6

Trump victory impacts on Malaysian market and their economy
Economic impact
1. Impact by TPPA: Malaysia is one of the leading economy of the world approx. $815
billion and their GDP growth rate is 5 percent which is quite goods as compare to other
Asian nations. They export billions of dollars’ product and services to US which
contribute 8.7 percent of total export. But after Trump administration and its signal to
break Trans Pacific Agreement having a huge impact. Because annually approx. $10
billion which provide large amount of foreign capital and jobs (Afonso, Furceri and
Gomes2012). It can lose the trade which directly hit its jobs and foreign currency reserve.
According to trans pacific agreement there are 14 major countries who made a agreement
between them through which they can apply a free trade between each other (Alfaro and
et.al ., 2010).
2. Imbalance on economy: Malaysia's exports increased by 13%. It can have vulnerable
effects on economy and also can create trade imbalance. Malaysia is open economy in which US
contributes more into their economy before Mr. President (Donald Trump) Presidency. The
exports can be 90%. Malaysia have 20% of trade directly from the USA but after this situation
their economy get affected most and thus companies market share also get decline from which
unemployment rate get decline. This can tend to have global uncertainty and private sector
investment can be decrease. All these factors have negative impact on country economy. If the
exports decreases with that domestic demand comes down by 3.6%. this can have adverse impact
on banks. Financial institute of country cut interest rates. So there can be potential to relief.

3.Increase traffic: This is another major issues which can decrease the growth rate of
Malaysian economy. There are large numbaer of US companies which having various
manufacturing facilities in Malaysia (Bond, Edmans and Goldstein, 2012). But recent Trump
administration announced that they increase tariffs on China and other countries which can
create a serious issue on the losing large number of employment (Challet, Marsili and Zhang,
2013).
Impact on stock and financial market:

1. Uncertainty in market: The another impact of Trump administration of the on the stock
market of Malaysia. There are large number of amount invested in the stock market
through FII investment. But recently the USA government is decided to rebuild their
infrastructure which can attract such investor which can reducing the FII inflow (Edmans,
Goldstein and Jiang, 2012). It can create uncertainty in the market which is not good for
the both companies and economy. According to the latest data of there are 1.2 percent
decline of Malaysian currency against US dollars. If these the export is continuously
growing down as well as the domestic demand which can leads to increase dissatisfaction
level of investor (Engelberg and Parsons, 2011).
2. Decrease in currency value: Malaysian ringgit assets become weak because it is a mixed
bad of equity market as well as bind market where there is decline got measure in equity
market with 1% but with stable bond market with a rate of 1.2%. This signifies that with
the help of other countries their economic is not suffering so much deficient (Hillier,
Grinblatt and Titman, 2011). But America is consider as one of the most trader with
them. Thus Trump victory made a negative impact on Malaysian economy.
3. The pressure on forex market might get high. If trump gets the victory. By this most of
investors shift to high quality trade. This can have positive impact on Malaysia economy.
The environment of country have advantage from this policies. The economy exports of
Malaysia, Singapore, Thailand can be impacted by US president trump victory
(Longstaff, 2010). These countries can face adverse impact as global exports for these
countries are 50% to 150% of country GDP. This can intend to give benefit to higher
prices commodities like oil, gas and coal sector.

REFERENCES
Books and Journals
Afonso, A., Furceri, D. and Gomes, P., 2012. Sovereign credit ratings and financial markets
linkages: application to European data. Journal of International Money and Finance. 31(3).
pp.606-638.
Alfaro, L., and et.al ., 2010. Does foreign direct investment promote growth? Exploring the role
of financial markets on linkages. Journal of Development Economics. 91(2). pp.242-256.
Bond, P., Edmans, A. and Goldstein, I., 2012. The real effects of financial markets. Annu. Rev.
Financ. Econ.. 4(1). pp.339-360.
Challet, D., Marsili, M. and Zhang, Y.C., 2013. Minority games: interacting agents in financial
markets. OUP Catalogue.
Edmans, A., Goldstein, I. and Jiang, W., 2012. The real effects of financial markets: The impact
of prices on takeovers. The Journal of Finance. 67(3). pp.933-971.
Engelberg, J.E. and Parsons, C.A., 2011. The causal impact of media in financial markets. The
Journal of Finance. 66(1). pp.67-97.
Hillier, D., Grinblatt, M. and Titman, S., 2011. Financial markets and corporate strategy.
McGraw Hill.
Longstaff, F.A., 2010. The subprime credit crisis and contagion in financial markets. Journal of
financial economics. 97(3). pp.436-450.
Online
Trumponomics’ impact on Malaysia. [2015]. Available through:<
http://www.theborneopost.com/2017/01/01/trumponomics-impact-on-malaysia/>. [Accessed on
30th May 30, 2017].