KUALA LUMPUR (June 8): The push for environmental, social and governance (ESG) agenda could serve as an investment opportunity in Asean old economy companies that are playing catch-up, said Malayan Banking Bhd (Maybank).
Amid decarbonisation and transition into renewable energy, Asean economies could also see significant capital injection and radical changes in business models that form part of ESG-related opportunities, it said.
“The region has many old-world economy companies that are catching up and transforming to become more green, diverse and inclusive, or risk being side-lined by customers and investors.
“Decarbonisation and transitioning to renewable energy will likely require significant capital injection and radical changes in business models, notably for companies in the hard-to-abate sectors,” said Maybank Investment Banking Group (Maybank IBG) chief executive officer (CEO) Datuk Ami Moris.
“For investors, this transformation potentially translates to alpha. Tomorrow’s winners are what Maybank seeks to identify at Invest Asean,” said Ami in a statement in conjunction with the Maybank Invest Asean 2022 conference.
In his opening speech for Invest Asean 2022, Maybank group president and CEO Datuk Khairussaleh Ramli said analysis by Maybank shows that sustainability actions have a positive impact on an organisation’s performance.
“Maybank backtested about 190 companies under its research coverage across ASEAN-6 markets, and found that those with higher ESG ratings, as measured by Sustainalytics, generated excess returns over the MSCI All Country Asean Index by 8.4% year-on-year, and 3.9% per annum for three years to March 31, 2022 respectively,” Khairussaleh said.
Meanwhile, Maybank chairman Tan Sri Zamzamzairani Mohd Isa said: “Home to the fastest growing population in the world and expected to be the fourth largest economy by 2030, Asean is an extremely attractive destination for businesses and investors."
“Asean’s growth this year is expected to be higher than China’s for the first time in the last 30 years,” Zamzamzairani said in his welcoming speech at the event.
The Asean markets, dominated by old economy companies, have been seeing some recovery coming off a low base on valuation and foreign ownership, on the back of accelerated economic reopening, commodity weightings on select countries, and less aggressive monetary tightening which benefit exporters.
Inflation and interest rate hike risks are also supporting a switch into value stocks, including banks, utility players, telecommunication companies and consumer staple stocks — although trade in Asean markets remains tactical rather than long term at this point, Maybank IBG equity research regional head Anand Pathmakanthan.