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Business Times
24-04-2025
- Business
- Business Times
KLCI tumbles as RM10b flees – Malaysia sees worst quarterly outflow in 7 years
[KUALA LUMPUR] Malaysia's equity rally has hit a wall as the FBM KLCI tumbled 7.3 per cent in the first quarter – making it one of the region's worst performers. Foreign investors pulled more than RM10 billion (S$3 billion) from the market over the three-month period, marking the biggest quarterly outflow since the landmark 2018 general election. A cocktail of global trade tensions, delayed initial public offerings (IPOs) and investor unease over US President Donald Trump's second term has soured the mood and upended early-year optimism. The sell-off, led by persistent foreign outflows and rising geopolitical headwinds, has wiped out much of the euphoria that drove the KLCI nearly 16 per cent higher in 2024, when it closed the year at 1,642.33 – its highest level since 2017. That rally, fuelled by expectations of upbeat macro prospects, US rate cuts and resurgent foreign inflows, now looks increasingly fragile. Sentiment has turned sharply negative from the final three months of 2024 and deteriorated further since with hopes of a dovish US Federal Reserve fading and concerns over Trump's intensifying protectionist trade agenda. Foreign funds have been net sellers for 26 straight weeks since November, pulling the index down to 1,513.65. The index has fallen 7.3 per cent in the first quarter of this year, underperforming the Asean-5 average decline of 4 per cent. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up IPO pipeline stalls The chill has also hit Malaysia's IPO pipeline, which was the biggest star last year by deal count among regional exchanges. The exchange drew 55 listings, raising RM7.4 billion in 2024. At least two listings – Cuckoo International and SPB Development – have been postponed, citing unstable market conditions. Bloomberg reported that advisers for South Korea's OCI Holdings have paused work on the IPO of its Malaysian polysilicon unit due to global market volatility. Despite these listing delays, Bursa Malaysia chairman Abdul Wahid Omar in an event in early April affirmed the bourse's target of 60 IPOs for the year, aiming for a combined market capitalisation of RM40.2 billion. That may sound a tad ambitious in today's climate – especially after 2024's glittering run, in which Bursa chalked up the highest number of new listings in two decades. That included the notable debut of 99 Speed Mart Retail, Malaysia's largest IPO in eight years and the biggest retail float in South-east Asia since 2020. As at Apr 15, Bursa Malaysia recorded 16 IPOs for the year. More than half closed above their offer price on debut – though most of the strong performers hit the market before February, which signals a slowdown in investor appetite since. All IPOs listed since March have experienced a marked decline in share prices on their maiden day of trading, with the notable exception of public bus services provider HI Mobility – which not only traded higher on its debut but has continued to outperform other recent IPOs. From sunny to gloomy 'The optimism that propelled last year's rally, particularly from the data centre boom in Johor, has waned,' said Neoh Jia Man, portfolio manager at Tradeview Capital. He noted that the technology sector has lost momentum, especially after Washington introduced the Artificial Intelligence Diffusion Rule, which dampened investor appetite for tech-related counters. Fourth-quarter earnings in 2024 broadly missed expectations, said Neoh, adding that companies grappled with rising operating costs, higher taxes and an uneven demand recovery. 'Investors are also nervous about the risk of retaliatory tariffs from the US, adding further strain to emerging-market sentiment,' he told The Business Times. Noting the significant capital flight, Apex Securities head of research Kenneth Leong said: 'Investors are now watching for clarity on the upcoming tariff negotiations and domestic fiscal direction.' Defensive tilt RHB Investment Bank slashed its year-end FBM KLCI target to 1,650 from 1,750, citing the unpredictability of US trade policy under the Trump administration. 'The risk of transactional tariffs leaves investor sentiment on edge,' said Alexander Chia, head of regional equity research at RHB. The brokerage recommends a defensive stance with higher cash allocations and selective exposure to quality domestic names. MIDF Research highlighted resilience in real estate investment trusts and financials, buoyed by attractive dividend yields. It also favours ringgit-centric stocks with minimal foreign revenue exposure. Macquarie echoed that view, noting that Malaysian, Indonesian and Philippine equities are trading at steep discounts to historical price to earnings levels, suggesting bottom-up stock picking over index-focused strategies. Fiscal cushion Malaysia spends heavily to shield consumers from rising fuel costs, with Ron95 petrol capped at RM2.05 per litre – the lowest in South-east Asia TAN AI LENG, BT Energy remains a potential bright spot – not for exports but domestic stability. Lower oil prices could help alleviate inflationary pressures in Malaysia, where energy costs ripple across transportation, manufacturing and food supply chains. Macquarie projects Brent crude to average between US$60 and US$68 per barrel till 2026, a level that could ease the fiscal pressure of Malaysia's fuel subsidy regime. Despite being a net oil and gas exporter, Malaysia spends heavily to shield consumers from rising fuel costs, with Ron95 petrol capped at RM2.05 per litre – the lowest in South-east Asia. Analysts expect the Malaysian government to delay adjustments to the Ron95 petrol price, citing the country's resource surplus and the narrowing gap between market and subsidised prices. 'We think it likely Malaysia will now defer any reform on Ron95 prices, given the narrowing gap between the market and subsidised price, and given a less predictable economic backdrop,' said analysts from Macquarie in an Apr 14 report. Still, downside risks loom. OCBC warned that if US tariffs extend to Malaysian semiconductor exports, which make up nearly a third of shipments to the US, Bank Negara Malaysia may be forced to cut rates sooner than anticipated. GDP downgrades, ringgit outlook The ringgit has shown modest strength, trading at 4.4348 per US dollar as at Mar 31, up 0.8 per cent from 4.4715 at the start of the year. Bloomberg Weaker external demand is prompting economists to lower Malaysia's 2025 growth outlook. OCBC now expects gross domestic product to expand 4.3 per cent, down from 4.5 per cent, while RHB cut its forecast to 4.5 per cent from 5 per cent. Citing broader downward revisions in regional forecasts, the International Monetary Fund on Apr 23 lowered its real GDP growth outlook for Malaysia this year to 4.1 per cent, down from the 4.7 per cent it predicted in January. MIDF and Kenanga Research remain more upbeat on the country's economic growth, with forecasts of 4.6 per cent and 4.8 per cent, respectively, pointing to resilient consumer spending and investment. Official data released on Apr 18 showed that the economy expanded 4.4 per cent year-on-year in the first quarter – slower than the 5 per cent pace in the previous quarter and below the Bloomberg median estimate of 4.8 per cent. The Department of Statistics Malaysia said the growth was underpinned by solid domestic activity and a healthy labour market. The Overnight Policy Rate is expected to remain at 3 per cent for now, though some analysts expect rate cuts could be on the table if downside risks materialise. The ringgit has shown modest strength, trading at 4.4348 per US dollar as at Mar 31, up 0.8 per cent from 4.4715 at the start of the year. MIDF forecasts the currency will strengthen further to 4.23 by year-end, though capital flow volatility tied to US policy remains a key risk. Earnings crunch The first-quarter corporate reporting season, beginning in May, could be a crucial inflection point. Investors will be closely watching for signs of resilience or further weakness as global uncertainty looms over markets. Tradeview's Neoh warned that volatility is likely to remain elevated in the months ahead as the persistent uncertainty surrounding US trade policy will continue to drive capital flows. 'Coming closer, investors will be paying close attention to corporate earnings releases next month, but more critically, to the forward-looking guidance offered by corporations given the prevailing circumstances,' said Apex's Leong. He noted that beyond corporate earnings announcements, the tabling of the 13th Malaysia Plan in July will also be closely watched. The 13th Malaysia Plan (2026-2030) is expected to outline strategies emphasising talent development and innovation to propel Malaysia towards a high-income nation status.
Free Malaysia Today
23-04-2025
- Business
- Free Malaysia Today
IMF cuts M'sia's 2025 GDP forecast to 4.1%
The International Monetary Fund previously put Malaysia's real gross domestic product growth forecast for 2025 at 4.7%. (Envato Elements pic) KUALA LUMPUR : The International Monetary Fund (IMF) has downgraded Malaysia's real gross domestic product (GDP) growth forecast for 2025 to 4.1% from 4.7% previously, reflecting a broader downward revision across the region. In its April 2025 World Economic Outlook, titled 'A Critical Juncture Amid Policy Shifts', the fund also projected that Malaysia's economy would expand by 3.8% in 2026. The IMF trimmed its global growth forecast for 2025 to 2.8%, down 0.5 percentage point from its January estimate. Regionally, the IMF cut Indonesia's 2025 outlook to 4.7% from 5.1%. The Philippines meanwhile is expected to grow by 5.5%, down from 6.1%, while Thailand's forecast was revised to 1.8% from 2.9%. The fund said major policy shifts were reshaping the global trade landscape and reigniting uncertainty, once again testing the resilience of the global economy. 'Since February, the US has announced multiple waves of tariffs against trading partners, some of which have invoked countermeasures. 'Markets initially took the announcements mostly in stride, until the US's near-universal application of tariffs on April 2, which triggered historic drops in major equity indices and spikes in bond yields, followed by a partial recovery after the pause and additional carve-outs announced on and after April 9,' it said. The IMF reiterated that the global economy was at a critical juncture, with signs of stabilisation emerging through much of 2024 after a prolonged and challenging period of unprecedented shocks. 'Inflation, down from multi-decade highs, followed a gradual though bumpy decline towards central bank targets. Labour markets normalised, with unemployment and vacancy rates returning to pre-pandemic levels,' it added. On productivity, the IMF noted widening discrepancies as manufacturing activity continued shifting from advanced economies to emerging markets. Industrial production plunged in all countries at the onset of the pandemic. The recovery paths, however, have been decisively different. Production soared in China and expanded in smaller European Union economies and the Asean-5 (Indonesia, Malaysia, the Philippines, Singapore, Thailand), whereas it struggled to return to pre-pandemic levels in Japan and the largest EU countries, the IMF said. The fund said industrial production in the US meanwhile had rebounded more strongly than in other advanced economies. On commodities, the IMF projected that fuel prices would fall by 7.9% in 2025, led by a 15.5% drop in oil prices and a 15.8% fall in coal prices. These declines are expected to be partially offset by a 22.8% rise in natural gas prices, driven by colder-than-expected weather and the cessation of Russian gas flows to Europe via Ukraine since January. Non-fuel commodity prices are forecast to increase by 4.4% in 2025.
BusinessToday
23-04-2025
- Business
- BusinessToday
IMF Cuts Malaysia's GDP Forecast To 4.1%
The International Monetary Fund has downgraded Malaysia's real gross domestic product (GDP) growth forecast for 2025 to 4.1 percent, from 4.7 per cent previously, reflecting a broader downward revision across the region. In its April 2025 World Economic Outlook, titled A Critical Juncture amid Policy Shifts, the fund also projected Malaysia's economy to expand by 3.8 per cent in 2026. The IMF trimmed its global growth forecast for 2025 to 2.8 per cent, down 0.5 percentage point from its January estimate. Among Malaysia's regional peers, the IMF cut Indonesia's 2025 outlook to 4.7 per cent from 5.1 per cent. The Philippines is now expected to grow by 5.5 per cent, down from 6.1 per cent, while Thailand's forecast was revised to 1.8 per cent from 2.9 per cent. The fund said major policy shifts were reshaping the global trade landscape and reigniting uncertainty, once again testing the global economy's resilience. 'Since February, the United States has announced multiple waves of tariffs against trading partners, some of which have invoked countermeasures. 'Markets initially took the announcements mostly in stride, until the United States' near-universal application of tariffs on April 2, which triggered historic drops in major equity indices and spikes in bond yields, followed by a partial recovery after the pause and additional carve-outs announced on and after April 9,' it said. The IMF reiterated that the global economy is at a critical juncture, with signs of stabilisation emerging through much of 2024, after a prolonged and challenging period of unprecedented shocks. 'Inflation, down from multidecade highs, followed a gradual though bumpy decline toward central bank targets. Labour markets normalised, with unemployment and vacancy rates returning to pre-pandemic levels,' it added. On productivity, the IMF noted widening discrepancies, as manufacturing activity continues shifting from advanced economies to emerging markets. Industrial production plunged in all countries at the onset of the pandemic. The recovery paths, however, have been decisively different. Production has soared in China and has also expanded in smaller European Union economies and the Asean-5 (Indonesia, Malaysia, the Philippines, Singapore, Thailand), whereas it has struggled to return to pre-pandemic levels in Japan and the largest EU countries,' it added. Meanwhile, the IMF said industrial production in the United States has rebounded more strongly than in other advanced economies. On commodities, the IMF projected fuel prices to fall by 7.9 per cent in 2025, led by a 15.5 per cent drop in oil prices and a 15.8 per cent fall in coal prices. These declines are expected to be partially offset by a 22.8 per cent rise in natural gas prices, driven by colder-than-expected weather and the cessation of Russian gas flows to Europe via Ukraine since January. Non-fuel commodity prices are forecast to increase by 4.4 per cent in 2025. Related
Daily Express
23-04-2025
- Business
- Daily Express
International Monetary Fund cuts Malaysia's 2025 GDP forecast to 4.1%
Published on: Wednesday, April 23, 2025 Published on: Wed, Apr 23, 2025 By: Bernama Text Size: The International Monetary Fund previously put Malaysia's real gross domestic product growth forecast for 2025 at 4.7%. (Envato Elements pic) Kuala Lumpur: The International Monetary Fund (IMF) has downgraded Malaysia's real gross domestic product (GDP) growth forecast for 2025 to 4.1% from 4.7% previously, reflecting a broader downward revision across the region. In its April 2025 World Economic Outlook, titled 'A Critical Juncture Amid Policy Shifts', the fund also projected that Malaysia's economy would expand by 3.8% in 2026. The IMF trimmed its global growth forecast for 2025 to 2.8%, down 0.5 percentage point from its January estimate. Regionally, the IMF cut Indonesia's 2025 outlook to 4.7% from 5.1%. The Philippines meanwhile is expected to grow by 5.5%, down from 6.1%, while Thailand's forecast was revised to 1.8% from 2.9%. The fund said major policy shifts were reshaping the global trade landscape and reigniting uncertainty, once again testing the resilience of the global economy. 'Since February, the US has announced multiple waves of tariffs against trading partners, some of which have invoked countermeasures. 'Markets initially took the announcements mostly in stride, until the US's near-universal application of tariffs on April 2, which triggered historic drops in major equity indices and spikes in bond yields, followed by a partial recovery after the pause and additional carve-outs announced on and after April 9,' it said. The IMF reiterated that the global economy was at a critical juncture, with signs of stabilisation emerging through much of 2024 after a prolonged and challenging period of unprecedented shocks. 'Inflation, down from multi-decade highs, followed a gradual though bumpy decline towards central bank targets. Labour markets normalised, with unemployment and vacancy rates returning to pre-pandemic levels,' it added. On productivity, the IMF noted widening discrepancies as manufacturing activity continued shifting from advanced economies to emerging markets. Industrial production plunged in all countries at the onset of the pandemic. The recovery paths, however, have been decisively different. Production soared in China and expanded in smaller European Union economies and the Asean-5 (Indonesia, Malaysia, the Philippines, Singapore, Thailand), whereas it struggled to return to pre-pandemic levels in Japan and the largest EU countries, the IMF said. The fund said industrial production in the US meanwhile had rebounded more strongly than in other advanced economies. On commodities, the IMF projected that fuel prices would fall by 7.9% in 2025, led by a 15.5% drop in oil prices and a 15.8% fall in coal prices. These declines are expected to be partially offset by a 22.8% rise in natural gas prices, driven by colder-than-expected weather and the cessation of Russian gas flows to Europe via Ukraine since January. Non-fuel commodity prices are forecast to increase by 4.4% in 2025. * Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss. * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
