Tradeview Capital's Wong said the FBM KLCI is likely to remain rangebound.
PETALING JAYA: Bursa Malaysia’s FBM KLCI is expected to continue hovering near the psychological 1,500-point level in the near term, as investors await more clarity – and preferably, a conclusion – to the ongoing global tariff skirmish that has plagued markets in recent weeks, say analysts and fund managers.
The benchmark index inched higher again yesterday, settling at 1,506.52 – a gain of 5.33 points from Wednesday’s close – after touching an intraday high of 1,507.45.
Market breadth was slightly positive, with 408 gainers outpacing 381 losers, while 556 counters ended unchanged.
While maintaining optimism that the tariff situation “should get better from here”, Rakuten Trade head of equity research Vincent Lau remains cautious about the market’s direction. He noted that the FBM KLCI may have already priced in the worst of the tariff-related impacts.
“We see the glass as half full, but we believe the market would be doing well to hold around the 1,500 level, without being overly optimistic.
“That said, a sit-down between China and the United States during the 90-day tariff pause would obviously benefit both sides and bring stability to global trade,” he told StarBiz.
Lau added that some institutional funds have a cap on how much cash they can hold, meaning they would need to redeploy into the market once the tariff situation begins to improve.
Still, he acknowledged that uncertainty remains high in the US-China dynamic.
He noted that US President Donald Trump’s softened approach towards China could pave the way for negotiations to begin – and more importantly, to conclude – within the 90-day window, especially given the intensity of recent developments.
Sharing Lau’s sentiments, Areca Capital chief executive and fund manager Danny Wong described the current US-China tariff standoff as unsustainable, noting that it benefits neither side in the long run.
He said while markets are hoping for easing global trade tensions, the sharp sell-off in March may have been overdone – creating pockets of value after the FBM KLCI fell to two standard deviations below its mean closing level of around 1,450.
“These factors have contributed to the market’s rebound. However, risks still exist. Therefore, the FBM KLCI is hovering around the current level, looking for a clue,” he explained.
Wong added that a fruitful negotiation between the United States and China remains the key upside catalyst. He noted that the index has formed a base at 1,500 points, with local institutions becoming net buyers to offset foreign fund outflows.
Meanwhile, Tradeview Capital chief investment officer Nixon Wong views Malaysia as a relatively small market compared to the United States and China, currently lacking strong catalysts.
He said the FBM KLCI is likely to remain rangebound, given the fluid macro environment and the lack of a conclusive resolution on trade tariffs.
“The supporting factors for the index are the growing probability of a Federal Reserve (Fed) rate cut due to subdued inflation data, as well as a slowing US economy, US corporate earnings’ resilience and stimulus activities in China that hopefully could lead to improved sentiment,” Nixon said.
However, he also highlighted potential risks, including delayed rate cuts due to stickier inflation data, heightening geopolitical risks, valuation concerns if corporate earnings growth slows, and China’s possibly weakened recovery if stimulus activities there fail to gain traction or its property market continues to drag, all of which could dampen global demand.
Despite these challenges, Nixon said the domestic picture appears positive, given the galvanising policies by the Madani government, coupled with trade diversion potential from the world’s major economies.
