1 week Ago By DIYANA ISAMUDIN
KUALA LUMPUR: In a surprise overnight announcement that rippled across global financial markets, the United States declared a 90-day pause on tariffs for most countries, sparking a surge in investor optimism and triggering a strong rebound on the local bourse.The decision was seen as a temporary easing of trade tensions, providing much-needed relief to global supply chains and export-driven sectors.The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) had fallen 8.
25 per cent since April 3, a day after US President Donald Trump's reciprocal tariff announcement, with the index slumping to 1,400.59 on Wednesday — its lowest level since July 13, 2023.Yesterday, the local bourse rebounded sharply, preventing a break below the critical 1,400 level and setting a positive tone for the day ahead.
The benchmark index opened 63.7 points or 4.5 per cent, higher at 1,464.
30 before settling at 1,463.13, up 4.47 per cent.
The broader market rally was led by the Technology Index, which had been hovering at its lowest points in two years. The index outperformed its sectoral peers, gaining 11.53 per cent or 4.
51 points to close at 43.63, amid renewed investor enthusiasm.POTENTIAL RECOVERY?UOB Kay Hian Wealth Advisors Sdn Bhd investment research head Mohd Sedek Jantan said Bursa Malaysia could see a partial rebound to pre-sell-off levels of around 1,504.
14 within the next few days.However, he said any further recovery to pre-tariff levels, such as the 1,526.52 reached on April 2 or higher, will depend on achieving greater clarity on tariff-related issues.
He emphasised that the sharp uptick in the local bourse observed yesterday is likely temporary and a sustained recovery will rely on the outcomes of ongoing negotiations between the Trump's administration and Asian leaders."Malaysia's official tariff response, expected on April 14, and a delegation meeting with Washington later this month, will be critical milestones. Regional Asean discussions could also bolster sentiment by fostering supply chain resilience.
"Without further escalation, the FBM KLCI could stabilise around 1,450-1,500 within one to two weeks. It could then move between 1,500 and 1,550 over the next 30 to 60 days, with a more complete recovery to above 1,600 possible by July, assuming trade tensions ease," he said.Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid adopted a more cautious stance, noting that the tariff issues are likely to take time to resolve, suggesting a prolonged recovery.
"Each country will need to fight their case in order to get some form of concession from the US. This will take a while and, in the meantime, the universal tariff of 10 per cent would be applied to the US importers. My sense is that markets could remain in doldrums in the next three to six months," he said.
MARKET STRATEGYDespite Wednesday's market rebound, both industry experts stressed that significant risks remain.Sedek pointed out several factors investors should monitor closely, including US-China trade dynamics, global recession risks, the Malaysian government's policy response and domestic fundamentals.He noted that while the tariffs mainly target China, Malaysia's US$51 billion trade surplus with the US and strong economic ties with China make it vulnerable to collateral damage.
"A slowdown in China's economy, currency devaluation, or retaliatory tariffs on US goods could negatively impact Malaysia's export sectors, especially electronics and manufacturing," he said. However, he believed despite external pressures, Malaysia's stable economic base, reflected in 2023's RM3.8 trillion capital market size and resilient domestic demand, offers a buffer.
"Sectors like utilities, real estate investment trusts (REITs), and consumer staples, less exposed to trade volatility, remain attractive safe havens," he said. WHAT LIES AHEAD?According to Sedek, the market outlook for the next 90 days (April to July 2025) hinges on the evolving US-China trade dispute and Malaysia's strategic response. He noted that historical patterns suggest that such sharp corrections often see rapid initial recoveries as bargain hunters step in.
"However, beyond this rebound, sector-specific trajectories will diverge based on exposure to global trade headwinds."Sectors poised for resilience or short-term recovery include healthcare services, consumer-related industries, and construction, which are less vulnerable to tariff shocks due to their domestic demand orientation," he said. Meanwhile, Mohd Afzanizam highlighted that KL Plantation Index and KL Consumer Index had the lowest decline on Monday.
It dropped by 3.2 per cent and 3.8 per cent respectively, he noted.
"Perhaps, these are the sectors that would be resilient to withstand the current calamity as the demand of their products may have lower elasticity as their products are commonly associated with basic necessities such as food," he said. Moving forward, Mohd Afzanizam believed the Fed will set the tone for the market. If they decide to provide a much bolder monetary stimulus i.
e. steeper rate cuts, he said this could bolster the market sentiments. "Aside from that, how soon the tariff issue can be resolved will dictate the market sentiments.
However, this might take a while as the US is also looking at the non-tariff barriers. "The case in point would be Vietnam where they have announced zero percent tariff on US imports but still the US government is not satisfied due to the non-tariff barriers," he added. © New Straits Times Press (M) Bhd.
