[MALAYSIA] Bursa Malaysia has taken a substantial hit as global equities face severe headwinds, largely driven by escalating trade tensions between the United States and Canada. Investors have turned risk-averse, shifting their focus from stocks to safe-haven assets. This has had a detrimental effect on local markets, with Bursa Malaysia experiencing significant losses. As global markets reel from the impact of the tariff conflict, Bursa Malaysia has struggled to maintain momentum, with the FBM KLCI hitting its lowest level in nearly 14 months.
US-Canada Trade War: A Catalyst for Market Panic
The trade tensions between the US and Canada have been the primary catalyst for the market sell-off. The US has threatened to impose additional tariffs on Canadian goods, further straining an already fragile economic relationship. This news has sent shockwaves through global equity markets, with investors pulling out of stocks and flocking to safer assets like gold and government bonds.
Rakuten Trade analysts have noted that foreign funds are the primary drivers of the sell-off, as many investors exit Southeast Asian markets in response to the tariff dispute. In particular, funds are moving to Hong Kong, viewed as a more stable market amid the turmoil. "We are certainly buyers of local shares at current levels," said Rakuten Trade, adding that the current market offers opportunities for bargain hunters. Despite the optimism, the short-term outlook for Bursa Malaysia remains uncertain.
The Bursa Malaysia Impact: Decline in Key Stocks
The sell-off in global equities has had a profound impact on Bursa Malaysia. On the morning of March 12, 2025, the benchmark FBM KLCI opened with a sharp decline of 16.56 points, falling to 1,504.74. This level was dangerously close to the psychological support of 1,500 points, marking the index's weakest level in nearly 14 months.
Despite being traditionally viewed as defensive stocks, Malaysia’s banking stocks were not immune to the broader market downturn. Major banks like Maybank, CIMB, and Public Bank saw significant declines in their share prices. Maybank dropped 12 sen to RM10.12, CIMB shed four sen to RM7.22, and Public Bank lost seven sen to RM4.34. The financial services index was down by more than 2% within the first few minutes of trading.
Other key stocks also saw notable losses. Companies like Kuala Lumpur Kepong and Tenaga Nasional also experienced declines. Kuala Lumpur Kepong fell 32 sen to RM20.15, Tenaga Nasional dropped six sen to RM13.34, and PETRONAS Dagangan lost 20 sen to RM16.50.
The Role of Foreign Investors in the Downturn
The sell-off was compounded by the actions of foreign investors. According to Rakuten Trade, foreign funds remain net sellers of Malaysian stocks, particularly as the trade conflict escalates. Southeast Asian markets, including Malaysia, have been hit hard as investors opt for the safety of Hong Kong markets.
Rakuten Trade also noted that despite the overall pessimism, the current market offers attractive entry points for investors. “The market is trending at a cheap 14x market price-earnings ratio,” the firm stated, suggesting that there could be opportunities for bargain hunting. This could provide some cushion to the index, which is expected to hover within the 1,515-1,530 range during the day.
Technical Indicators and Future Outlook
From a technical perspective, analysts are advising caution as the market navigates through the turbulence. TA Securities has revised the immediate index support level down to the 1,500 psychological level, with the next key support seen at 1,472. Resistance levels have also been adjusted, with immediate resistance set at 1,550, then 1,580. Analysts are keeping a close eye on upcoming US economic data, including consumer and producer price inflation reports, as well as consumer sentiment figures, which could provide further insight into the global economic outlook.
Given the current market conditions, it is likely that the Bursa Malaysia index will remain under pressure in the near term. The volatility stemming from the US-Canada trade dispute and its impact on global equities is expected to continue. However, as Rakuten Trade pointed out, the current dip in stock prices could attract bargain hunters looking to capitalize on lower valuations.
Global Equity Market Trends
The broader trend in global equity markets has been marked by a retreat from riskier assets as geopolitical uncertainties, such as the US-Canada trade conflict, weigh heavily on investor sentiment. The trade war between the US and Canada has created a ripple effect across the globe, contributing to increased market volatility.
As tensions escalate, investors are becoming more cautious about the potential economic fallout, leading them to seek shelter in traditional safe-haven assets. Gold, government bonds, and other low-risk investments have seen increased demand as a result. This shift in investor behavior has had a particularly strong impact on emerging markets like Malaysia, where foreign capital plays a significant role in driving market performance.
Bursa Malaysia’s Response to Market Pressure
Bursa Malaysia, like many other stock exchanges around the world, is feeling the pressure of the global sell-off. However, analysts remain cautiously optimistic about the long-term prospects of the Malaysian market. Despite the current volatility, Malaysia's stock market is viewed as undervalued, with some analysts recommending it as a buying opportunity for long-term investors.
Rakuten Trade believes that the market’s price-earnings ratio, which is currently at a relatively low 14x, presents a good chance for bargain hunting. However, the firm also acknowledges that the overall outlook remains cautious, as the market could face further volatility in the short term.
The ongoing US-Canada tariff threats have created a turbulent environment for global equities, and Bursa Malaysia has not been immune to this pressure. While the short-term outlook remains uncertain, there are signs that investors are beginning to view the current market conditions as an opportunity to buy stocks at discounted prices. However, analysts warn that the situation remains fluid, and investors should remain cautious in the face of ongoing geopolitical risks.
For now, Bursa Malaysia’s performance is closely tied to the broader global market trends, with the US-Canada trade conflict continuing to exert significant influence on investor sentiment. As the situation develops, it will be crucial for investors to stay informed and be prepared for further volatility in the coming weeks.
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