Malaysian stocks stay steady after US rally

Bursa Malaysia opens flat after a rally the previous day, with the FBM KLCI slipping 1.72 points to 1,537.92. Analysts expect optimism over a potential US interest rate cut to boost sentiment, but caution that a sustained move depends on stronger buying momentum and improved liquidity. Top picks include YTL Power, Tenaga Nasional, IJM, Time dotCom, Gas Malaysia, and Solarvest.

KUALA LUMPUR: Bursa Malaysia opened flat on Monday, July 2, 2025, with the FTSE Bursa Malaysia KLCI (FBM KLCI) slipping 1.72 points to 1,537.92. The index's performance follows a midday rally on Friday, July 1, 2025, when it surged 20.10 points or 1.33% to close at 1,533.35. Analysts remain optimistic about a potential US interest rate cut, which could boost market sentiment. However, they caution that a sustained move depends on stronger buying momentum and improved liquidity.

The midday rally on Friday was driven by the United States' decision to reduce tariffs on Malaysian exports to 19% from 25%. This move was seen as a significant achievement for Malaysia, as it secured the reduction without compromising national policy sovereignty [1]. The tariff cut has been attributed to the positive impact on investor sentiment and trade activity.

Investment, Trade, and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz described the tariff reduction as a "significant achievement" [1]. Malacca Securities noted that the lower 19% tariff may support local trade activity, particularly in energy players like Deleum, ITMAX, and Tenaga Nasional [1].

Analysts have identified several top picks that could benefit from the tariff reduction and potential interest rate cut. These include YTL Power, Tenaga Nasional, IJM, Time dotCom, Gas Malaysia, and Solarvest. YTL Power has recently inked a strategic collaboration deal with NVIDIA Corporation worth RM10 billion ($2.36 billion) to use NVIDIA's high-performance graphics processing units for AI data centers [2].

Despite the optimism, analysts warn that the market may remain in consolidation mode until stronger buying momentum and liquidity are evident. The local benchmark index is expected to hover around the 1,530 level, awaiting US jobs data and economic indicators from China [3].

The broader market also showed positive signs, with gainers outpacing losers. Among the heavyweights, Maybank, Public Bank, and Tenaga Nasional were among the top gainers, while Nestle and Mesiniaga were among the top losers [3].

The FBM Emas Index, FBMT 100 Index, and FBM Emas Shariah Index all showed significant gains, indicating a positive sentiment across various sectors [3]. The financial services index surged, while the energy index also showed improvement [3].

As Bursa Malaysia continues to navigate the impact of the tariff reduction and potential interest rate cut, investors and financial professionals are keeping a close eye on market developments. The market's performance will likely be influenced by economic data and policy announcements in the coming days and weeks.

References:
[1] https://www.thestar.com.my/business/business-news/2025/08/01/bursa-malaysia-rallies-at-midday-as-us-tariff-cut-lifts-sentiment
[2] https://au.finance.yahoo.com/news/nvidia-nvda-strikes-2-36b-114927934.html
[3] https://www.freemalaysiatoday.com/category/business/2025/08/01/bursa-rises-on-us-tariff-reductions-13mp-optimism