Malaysia stocks extend rebound as Xi visit lifts sentiment

[MALAYSIA] Boosted by another strong performance on Wall Street, shares on Bursa Malaysia continued to rise Tuesday. The benchmark FBM KLCI climbed 3.15 points to 1,484.01, extending a three-day rally as investors continue to look for bargains in an oversold market. According to commentators, Chinese President Xi Jinping's state visit to Malaysia is also helping to boost market mood.

"With President Xi's arrival in Malaysia today, we expect bullish momentum in the FBM KLCI to persist on hopes of increased Chinese investments," said Malacca Securities Research in a note.

President Xi’s visit marks his first to Malaysia since 2013 and is part of a broader Southeast Asia tour aimed at strengthening regional partnerships under Beijing’s Belt and Road Initiative. Malaysian officials have expressed optimism that the visit could yield fresh memoranda of understanding (MoUs) in infrastructure development, green energy, and high-tech manufacturing. These agreements, if realized, could bolster Malaysia's economic prospects and fuel further interest in local equities.

In anticipation of closer bilateral ties, several Malaysian firms with exposure to Chinese markets or infrastructure development, such as construction, logistics, and renewable energy companies, saw heightened trading volumes. Investors are betting that new joint ventures and trade facilitation measures could be announced during Xi’s multi-day visit, providing a near-term catalyst for market activity.

The research group also stated that China has ceased rare earths exports to the United States, offering Malaysia negotiating power for tariff relief during the 90-day pause because it contains the world's largest rare earths processing facility outside China.

Economists note that Malaysia’s position as a rare earths hub could grow in strategic importance amid intensifying US-China trade tensions. The Lynas rare earths plant in Pahang is viewed as a critical node in the global supply chain, and any enhanced cooperation between China and Malaysia in this sector could have geopolitical as well as economic ramifications.

Meanwhile, TA Securites predicts that stocks will continue their gains as a result of ongoing recovery bets, while investors will closely monitor President Xi's visit for clues on future trade relations.

"Immediate support remains at 1,400 psychological level, with stronger support around the June 2023 low of 1,369, followed by 1,320. Immediate resistance is maintained at 1,490, which represents the 38.2%FR of the rally from the 1,369 low (June 2023) to the 1,684 peak (August 2024), with next upside hurdles seen at the 50%FR (1,527) and the 61.8%FR (1,564)," according to a market commentary released by the research firm.

Market watchers are also keeping an eye on broader macroeconomic signals, including upcoming GDP figures and Bank Negara Malaysia’s monetary policy stance. A better-than-expected growth print or a dovish tone from the central bank could further reinforce bullish sentiment on Bursa Malaysia. Until then, trading is expected to remain news-driven, particularly by developments related to Xi’s visit and regional trade discussions.