Bursa Malaysia falls amid Trump tariff shock

[MALAYSIA] Malaysian equities took a hit this morning as Bursa Malaysia opened sharply lower following U.S. President Donald Trump’s announcement of sweeping new tariffs on global imports. The move, which escalates an already tense global trade war, has sent shockwaves through financial markets across Asia.

Key Market Impact

The FTSE Bursa Malaysia KLCI (FBM KLCI) dropped 6.93 points, or 0.45%, to 1,519.59 shortly after trading began, after opening even lower at 1,517.30. Decliners outpaced gainers nearly three to one, with 311 counters in the red compared to just 122 gainers. Among the top losers were Nestle Malaysia, which fell RM2.46 to RM70.20, and Hong Leong Bank, which slid 20 sen to RM20.18.

Market analysts attribute the decline to weakened investor sentiment following Trump’s announcement of a baseline 10% tariff on all imports into the U.S., effective April 5, with higher reciprocal tariffs targeting specific countries—including Malaysia—set to take effect on April 9.

Malaysia Faces a 24% Reciprocal Tariff

Under the new tariff regime, Malaysia will be subjected to a 24% tariff on its exports to the U.S., a rate that reflects roughly half of the tariffs Malaysia imposes on American goods, according to Trump’s “reciprocal tariff” framework. While this rate is lower than those imposed on some other Asian nations—such as Vietnam (46%) and Cambodia (49%)—it is still expected to weigh heavily on Malaysian exporters.

Inter-Pacific Research noted that while Malaysia’s direct trade with the U.S. accounts for only about 10% of its total trade volume, the new tariffs are likely to trigger a wave of selling in Malaysian equities as investors react to heightened uncertainty. “The FBM KLCI’s recent losses may have already priced in some of the anticipated impacts, but further downside risks remain,” the firm said in a note.

Global Trade War Escalates

President Trump unveiled his tariff plan during a Rose Garden address on Wednesday, calling it a “proclamation of economic independence.” The tariffs include a universal 10% baseline rate for all imports and significantly higher rates for countries deemed to impose unfair trade barriers against U.S. goods. China faces an effective tariff rate of 54%, while Japan and India will see rates of 24% and 26%, respectively.

Trump justified the measures by citing persistent trade deficits and alleged unfair practices by trading partners. “For years, our nation has been exploited and robbed by countries both near and far,” he declared. “Now it is our opportunity to thrive.”

Economists have warned that these measures could lead to higher prices for consumers globally and disrupt supply chains for key industries such as automotive manufacturing and electronics.

Regional Market Reactions

Asian markets broadly reacted negatively to the news. Japan’s Nikkei index fell by over 1% in early trading, while Hong Kong’s Hang Seng Index also saw significant losses. Analysts expect continued volatility as markets digest the implications of Trump’s aggressive protectionist policies.

Rakuten Trade anticipates that the FBM KLCI will trend between the 1,500-1,520 range amid heightened regional market volatility. “While Malaysia’s reciprocal tariff rate is among the lowest in Asia-Pacific, investor sentiment remains fragile,” it said.

Outlook for Malaysian Equities

Despite today’s losses, some analysts believe that Malaysian equities may be spared from the worst effects of Trump’s tariffs due to the relatively small share of its trade tied directly to the U.S. However, broader concerns about global economic growth and supply chain disruptions could weigh on investor confidence in the coming weeks.

Inter-Pacific Research identified key support levels for the FBM KLCI at 1,510-1,513 and resistance levels at 1,531-1,535 points. “Market players are likely to remain cautious until there is greater clarity on how these tariffs will impact global trade flows,” it added.

As markets brace for further fallout from Trump’s sweeping tariff measures, Malaysian investors are left grappling with heightened uncertainty amid an increasingly volatile global economic environment. While Malaysia may avoid the harshest impacts compared to some of its regional peers, today’s market performance underscores the far-reaching consequences of escalating trade tensions between major economies.

With reciprocal tariffs set to take effect next week, all eyes will be on how governments and businesses adapt to this new era of protectionism—and whether cooler heads will prevail in averting a deeper global economic downturn.