Bursa Malaysia dips amid US tariff fears

[MALAYSIA] Bursa Malaysia, a key stock exchange in Southeast Asia, has recently experienced a downturn amid rising concerns over fresh tariff threats from the United States. These uncertainties are adding volatility to the markets, and traders are responding to the risk of a potential escalation in global trade tensions.

US President’s Tariff Announcement

At the start of the trading week on February 10, 2025, the benchmark FBM KLCI index dropped by 3.26 points, reaching 1,587.65. This decline came after the weekend announcement from U.S. President Donald Trump, in which he vowed to impose reciprocal tariffs on all of the country's trading partners. Trump’s statement has raised fresh fears of a global trade war, echoing tensions from the previous US-China trade disputes.

U.S. President Donald Trump's vow of rising taxes weakened trade morale. The promise to implement new tariffs has added to the uncertainty in global markets, causing investors to pull back, and prompting profit-taking activities in various sectors.

Sectorial Outlook Amid Trade Fears

Despite the bearish outlook for the stock market in general, some sectors are expected to fare better in the face of these geopolitical risks. For instance, Malacca Securities Research pointed out that the ongoing US-China trade tensions, combined with a stronger dollar outlook, are expected to benefit Malaysia’s glove sector. As demand for medical gloves remains high, local companies in this field may see continued growth despite the broader market slowdown.

Additionally, sectors like renewable energy, construction, and property are poised for growth due to government initiatives such as the Johor State Special Economic Zone (JSSEZ) and the National Energy Transition Roadmap (NETR). These sectors are expected to receive sustained support, potentially offsetting broader market losses caused by external trade uncertainties.

A More Optimistic View on Foreign Investment

On the flip side, Rakuten Trade offered a more optimistic outlook on Bursa Malaysia's prospects. The research firm highlighted that despite the current market dip, the slowdown in fund outflows during the previous week suggests that foreign funds may be returning to Malaysia. "On the home front, the FBM KLCI continues with its climb to land at 1,590 as we believe foreign funds may have returned," Rakuten Trade commented. This trend indicates that investors are gradually regaining confidence in Malaysia’s market despite the ongoing global trade tensions.

The Impact of Foreign Investment and Trading Volume

One of the key indicators of market sentiment is foreign investment, and recent reports suggest that while foreign funds have been cautious in their movement, there are signs that these funds may begin to flow back into Malaysia. "Though the daily trading volume remains subdued, we are hopeful that this will improve as foreign money trickles back," Rakuten Trade added in its market outlook. This renewed foreign interest could provide some much-needed stability for Bursa Malaysia as it navigates the current challenges.

However, it is essential to note that trading volume on the exchange remains relatively low, which signals that investor confidence is still shaky. For the moment, analysts are forecasting that the index will fluctuate within the 1,585-1,595 range until a clearer picture emerges regarding the potential impacts of the US tariffs.

Notable Decliners and Market Performance

Among the significant decliners on Bursa Malaysia, several well-known companies saw their stock prices dip. For example, F&N dropped 34 sen to RM25.86, while Gamuda lost 11 sen, bringing its stock price down to RM4.45. CIMB, a major banking group in Malaysia, also saw a decrease of 10 sen, closing at RM8.29. Other companies that experienced losses included YTL Power, which fell by 6 sen to RM3.38, and Inari Amertron, which was down by 6 sen, reaching RM2.66.

Despite the declines in established stocks, some new market players showed promising signs. Colform, a company newly listed on the ACE Market, saw a positive start, rising by 2 sen to 38 sen within the first 15 minutes of trading. The stock experienced a surge in trading volume, with over 61.63 million shares changing hands. Other smaller stocks like TWL and Harvest Miracle also posted minor gains, further highlighting the mixed sentiment on Bursa Malaysia.

Conclusion: Navigating Uncertainty

The current dip in Bursa Malaysia amid fresh US tariff threats underscores the sensitivity of emerging markets to global economic shifts. While broader market sentiment remains cautious, particularly in light of new trade tariffs, certain sectors in Malaysia are positioning themselves for growth through government-led initiatives and resilience in sectors like gloves. Additionally, there are hopeful signs of foreign funds returning, which could stabilize the market in the long term.

Investors and analysts are closely monitoring developments, as the coming weeks will likely determine whether the market can recover from the initial shock or if the tariff fears will lead to prolonged volatility.