Malaysian stocks rally on US tariff exemptions

[MALAYSIA] Domestic shares prices rose on Monday following the weekend announcement that the US would provide tariff exemptions on cellphones and electronics. The decision showed that the Trump administration was looking for methods to alleviate the downward pressure of tariffs on the US economy and bond prices, which boosted investor optimism and propelled global shares prices up.

The exemptions, which cover key consumer electronics, come as a relief to manufacturers and exporters in Malaysia, particularly those in the semiconductor and electrical components sectors. Analysts note that these industries had been bracing for higher costs amid the escalating trade tensions, and the reprieve could provide a short-term boost to export-driven stocks.

At 9 a.m., the FBM KLCI was 19.29 points higher than last Friday's finish of 1,474.05. The benchmark has retraced more than half of its losses, or around 74 points, since the trade war began on April 3, falling to a low of 1,400 points on April 9.

Market watchers attribute the rebound to a combination of bargain-hunting and cautious optimism over the temporary tariff relief. However, some caution that the rally may be fragile, as underlying trade tensions between the US and China remain unresolved. Any negative developments in negotiations could trigger another wave of volatility.

However, Rakuten Trade warned that investors were concerned about the potential impact of the expiration of the 90-day tariff respite. "We can expect a volatile day ahead. Nonetheless, this is positive for the market's trading pace, which has recently increased," it stated in a note. "We expect the index to trend between the 1,440-1,460 range today."

Adding to the uncertainty, regional markets also displayed mixed reactions. While Japan’s Nikkei and South Korea’s KOSPI saw modest gains, Hong Kong’s Hang Seng lagged due to lingering concerns over tech sector exposure to US trade policies. This divergence highlights the uneven impact of trade developments across global markets.

In its technical analysis, TA Securities stated that the FBM KLCI's short-term technical momentum and trend indications are mixed following the previous week's tumultuous activity.

It anticipated that bumpy trade would continue this week as investors react to the tit-for-tat tariff escalation between the United States and China and seek clearer clarity on the path of global trade policy. "However, medium-term momentum indicators on the local benchmark index indicate blue chips are poised for a rebound after falling to extremely oversold levels."

Meanwhile, the recent 90-day negotiation period for reciprocal tariffs offered by the Trump administration to our country should also lift local market sentiment going forward. On Bursa Malaysia, the leading actives were Nationgate rising seven sen to RM1.30, Inari Amertron jumping 17 sen to RM1.83 and MYEG gaining 1.5 sen to 91.5 sen.