Dr. Sailesh Kumar Jha, former Chief Asia Economist at Credit Suisse AG Singapore
By Tengku Noor Shamsiah Tengku Abdullah
KUALA LUMPUR – In a world of economic uncertainty and geopolitical turbulence, Malaysia has managed to implement fiscal reforms with surprising deftness, according to Dr. Sailesh Kumar Jha, a distinguished economist and financial market strategist whose insights are informed by over two decades at the pinnacle of global finance.
Dr. Jha, a former Chief Asia Economist at Credit Suisse AG Singapore, has navigated senior roles across investment banking and buy-side research in the United States, Singapore, Hong Kong, Malaysia, the Philippines, and Taiwan.
His track record speaks volumes. Over the past 20-plus years, Dr. Jha’s market calls have outperformed major global passive funds and hedge funds returns in four of five periods since 2003, avoided major drawdowns during the 2007-2010 financial crisis by moving to cash, and between 2022 and 2025 delivered investment strategy returns more than four times those of passive funds and seven times the hedge fund average. His investment strategy across conventional and alternative asset classes has consistently achieved relatively high Sharpe ratios in emerging market trades over the last around twenty years.
A PhD economist from the University of Washington, USA, specializing in macroeconomics and time series econometrics, Dr. Jha is recognized as a trade policy expert who worked on China’s entry into the World Trade Organization and possesses deep familiarity with the GATT Uruguay and Doha rounds of negotiations. His expertise extends to the geopolitics of the Middle East, China, India, and the United States, supported by a wide network of contacts at global central banks and proven forecasting capabilities using proprietary econometric models.
Speaking in an exclusive interview, Dr. Jha offered a positive assessment of Prime Minister Datuk Seri Anwar Ibrahim’s handling of the economy and financial markets, particularly in implementing crucial fiscal reforms that stabilised the ringgit and restored investor confidence.
Perfect Timing and Strategic Positioning
Dr. Jha’s detailed analysis, informed by decades observing sovereign debt crises and currency volatility across Asia and Latin America, reveals how Malaysia narrowly avoided a more severe economic and financial market downturn. Drawing on his experience during Indonesia’s and the Philippines’ sovereign debt problems, he noted a critical pattern: policymakers typically act decisively when currency and financial markets are under stress.
“Having been based in Malaysia from November 2020 to November 2023, when I was bearish on Malaysia’s economy, fiscal position, and financial markets, I now turn bullish. I was in Malaysia in December 2025 and February 2026 and I believe a strong turn around path for this Southeast Asian Economy is underway and will continue in 2026. Malaysia will outperform the rest of the major Southeast Asian Economies such as Indonesia, the Philippines, Singapore, and Thailand in 2026 in terms of its currency market. Malaysia’s stock market will be the second-best performing equity market, just behind Singapore, in Southeast Asia this year. In terms of the 10YR government bond market, I expect Malaysia to be the second-best performing market (MGS 10YR), just behind Singapore, in Southeast Asia in 2026.”
“The main reasons supporting my aforementioned bullish views on Malaysia’s financial markets for 2026 are the following. The strong pace of fiscal reforms in the past two years will continue to have a tail wind on its economy and financial markets, USDMYR will continue to remain resilient, the Malaysia second home (MM2H) policy will induce further capital inflows, and Prime Minister Anwar Ibrahim’s well-articulated and capable diplomatic skills in handling of global geopolitics, in my view, is very positive for the outlook for Malaysia’s economy and financial markets in 2026.”
“I expect USDMYR to trade in a range of 3.85-3.95 in 2026 versus the current around 3.90 as the tail winds from robust fiscal reforms continues to impact the currency, capital flows to the equity and government bond market will accelerate, the MM2H policy will induce further capital inflows to the residential property market, and Foreign Direct Investment (FDI) will accelerate. In addition, the USDMYR correlation with USDCNH will be around 70% with CNH likely to continue to remain resilient in 2026. Note that contrary to some market analysts, my view is that the drop in USDMYR in 2025 has limited to do with the weakness in the broad USD Index (DXY index). I am also of the view that peak USD weakness is behind us and 2026 will be characterized by the DXY index trading in a range of 97-101 versus the current around 97.”
“Malaysia has come a long way since 2023 when USDMYR traded at an intra-day high of around 4.79 in October 2023 versus my end-2023 USDMYR forecast of 4.75-4.85 (which I published in the summer of 2023) and the current USDMYR level of around 3.90. My end-2023 above consensus USDMYR forecasts were based on my assessment that Malaysia needed to speed up its pace of fiscal reforms, tighten monetary policy further, and domestic sentiment toward the currency needed to improve. Fortunately, the Malaysian government and Bank Negara announced significant and expeditious policy reforms in 2024 and 2025.”
“I expect the primary balance deficit (overall fiscal balance less interest expenses) to print around 0.8% within the next two years. Malaysia’s primary balance deficit in 2025 printed around 1% of GDP (which is very respectable) considering that it printed around 4.0% in 2021. The drop in the primary fiscal balance will be driven by a reduction in operational expenditures to around 16.0% within the next two years versus around 16.6 % in 2025 and around 17.1 % in 2024 due to further reforms to curtail administrative expenditures. In addition, the full impact of the sales services tax (SST) policy reforms will continue to be felt over the next two years and raise tax revenues/GDP, and the expenditure on fuel subsidies could fall further and induce the overall subsidies and social assistance bill to drop to around 2.4% of GDP in the next two years from around 2.8% of GDP in 2025 and around 4.3% in 2023. This drop in overall subsidies and social assistance could be due to fuel subsidies declining due to a significant pickup in electric car vehicles (EV) usage by consumers.”
“Also note that domestic sentiment towards MYR has stabilized as foreign currency deposits in the domestic banking system to GDP ratio has remained broadly unchanged at around 15% for the last three years. In additional, external vulnerability indicators have also stabilized over the last two years and are likely to remain as such in the next two years.”
“In terms of capital flows, I expect foreign institutional investor to drive the KLCI index up to around 1900 in 2026 from around the current level of around 1737 as the banks, property, and technology sector fundamentals continue to improve and GDP growth prints around 5.5-6.0% in the next two years versus the trend GDP growth rate of around 4.0-4.5%.”
“The MM2H policy is likely to continue to drive capital flows to the residential property market, primarily in Kuala Lumpur, as individuals from China, North Asia, and Singapore continue to look for relatively affordable housing and household expenses geographies overseas.”
“I expect FDI/GDP to rise to around 1.5% of GDP in the next two years from around 1.0% in 2025 as China’s and India’s investment in the EV sector picks up, along with foreign investment in the logistics, data center, electronics chip manufacturing sectors accelerating in the next two years.”“I expect MGS 10YR yields to rise to around 3.65 to 3.75% in 2026 versus the current around 3.54% as US Treasury 10YR yields rise to around 4.50% from the current around 4.05% as it becomes clear that US core PCE inflation is likely to hover around 3.0% rather than the US Federal Reserve’s (FED) target of 2.0%, US GDP growth will be robust for much of 2026, and employment conditions will improve in 2026. I expect, international sovereign wealth funds to some what follow the path Norway’s sovereign wealth fund in 2026 and invest a larger amount of capital into Malaysia’s government bond markets. This along with robust appetite from domestic investors, will keep MGS 10YR yields well below 4.0% for the better part of 2026 as government bond yield in developed markets such as the US and Japan rise and break out to higher trading ranges from current levels.”
Some Major Global Central Banks and Sovereign Wealth Funds Response to Trump’s Tariffs
Dr. Jha offered a provocative theory about the dollar’s weakness that diverges from mainstream explanations. While consensus views attribute dollar depreciation to reduced demand for dollar assets and economic concerns, he pointed to coordinated action by some major global central banks and sovereign wealth funds.
When US tariffs were implemented in early 2024—imposing 20 to 40 percent duties on many countries around the world suddenly—these nations faced a strategic question: how to navigate under these challenging circumstances?
“They started selling dollars,” Dr. Jha stated matter-of-factly. “Major global central banks and some sovereign wealth funds started selling dollars in my view.”
The strategy proved effective. “The dollar plunged from 105 on the DXY index to approximately 97,” Dr. Jha observed.
Following negotiations that brought tariffs to more tolerable levels, the coordinated dollar selling ceased, and the DXY index has since stabilized in a 96 to 99 range.
Praise for Measured Leadership
Despite acknowledging his initial concern about the Malaysian government’s willingness to deliver reforms, Dr. Jha has revised his assessment.
“In my opinion, as an outsider, in this very volatile world of ours where all kinds of problems and dislocations are happening, my conclusion is that the Malaysian leadership has handled it very well,” he said, referring to Prime Minister Anwar Ibrahim.
What does “handling it well” mean in this context? Dr. Jha argued that maintaining a measured, mutual understanding approach represents sophisticated statecraft in today’s challenging and fast changing geopolitical environment.
Malaysia’s balanced diplomacy, combined with timely fiscal reforms and other significant policy reforms, has positioned the country to navigate a turbulent international landscape while maintaining economic stability.
Looking Ahead
In conclusion, in 2026 as global geopolitical conditions remain in flux, the uncertainty on US global economic policy remains large, and the FED is at a turning point as substantive policy interest rate cuts are behind us and the risks of policy interest rate hikes in early 2027 are building, Malaysia will be considered by international investors to be an important destination in Southeast Asia to invest in its currency, equity, and government bond markets.
- TNS News