“Our economists believe that the tailwinds to exports are fading, which will result in export growth moderating from mid-teens rate to mid-single digit for the rest of the year,” it said.

“Moderation in export growth from ‘great’ to ‘good’ could result in greater differentiation in the growth outlook across economies. Our economists expect domestic demand growth to improve, partly offsetting weaker exports, at least in ASEAN (Association of Southeast Asian Nations).”

Such a macro backdrop has led to Credit Suisse preferring Southeast Asian banks in the second half of 2017, deviating from its stance of favoring North Asian banks earlier in the year.

The bank, which already liked Singapore and Indonesia, also added Malaysia to its list. Malaysia’s economy, it said, will benefit from government spending ahead of a general election and the laggard impact of commodity price increases.

Malaysian banks, which have delivered negative earnings growth for four straight years, are expected to finally turn the corner this year, the report pointed out.

“The banks’ earnings in the remaining part of 2017 could be boosted by potential pick-up in non-interest income as capital market activity picks-up, loan growth acceleration, and further asset quality relief that could translate to lower credit costs,” said Credit Suisse, picking CIMB as its top choice.

Credit Suisse also pointed to trading opportunities in Thailand later this year, especially if the country’s banks could confirm that formation of bad loans have peaked in their 2018 guidance due in November. That, along with declining credit costs, may get markets excited.

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