Latest news with #RM160.6bil
The Star
2 days ago
- Business
- The Star
Bursa up as investors welcome trade framework
At 5pm, the FBM KLCI rose 6.89 points, or 0.45% to 1,523.84 from Tuesday's close of 1,516.95. KUALA LUMPUR: Bursa Malaysia ended higher yesterday, with investors adopting a cautiously optimistic stance following the announcement of a United States-China trade framework agreement, which includes provisions on technology trade. At 5pm, the FBM KLCI rose 6.89 points, or 0.45% to 1,523.84 from Tuesday's close of 1,516.95. The benchmark index opened 3.91 points higher at 1,520.86 yesterday morning, which was its day's low, and subsequently moved to a high of 1,530.85 in the early session. On the broader market, gainers thumped decliners 545 to 375, while 528 counters were unchanged, 921 untraded and 11 suspended. Turnover soared to 3.27 billion units worth RM2.59bil compared with yesterday's 2.72 billion units worth RM2.09bil. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan told Bernama that the development in the US-China trade negotiations marks a constructive step toward de-escalation, although it falls short of a material breakthrough. Domestically, the market found additional support from encouraging macroeconomic data, with figures released yesterday by the Statistics Department showing that the sales value of the manufacturing sector rose by 4.8% year-on-year in April 2025, reaching RM160.6bil. — Bernama
The Star
2 days ago
- Business
- The Star
Export growth hinges on trade talks
PETALING JAYA: The possibility of Malaysia's economic growth outlook being weighed down by the overall exports performance is now becoming more apparent with the latest industrial production index (IPI) and manufacturing data released by the Statistics Department. The government forecasts gross domestic product (GDP) growth of 4.5% to 5.5% this year. For the first quarter of financial year 2025 (1Q25), GDP grew 4.4% after expanding 5% in 4Q24. The prevailing sentiment continues to be that overall exports performance would depend on the outcome of the ongoing trade negotiations to lower the now paused reciprocal tariffs portion of the Liberation Day tariffs imposed by the United States while demand for the country's manufactured goods would depend on global economic conditions and shifts in the supply chain. The April IPI expanded 2.7% compared to the 3.2% growth in the same month a year ago mostly due to the 5.6% rise in the manufacturing index, with the mining and electricity indices contracting 6.3% and 1.6% respectively. Drilling down further, export-oriented industries grew 6.4% after registering a 4.8% increase in March. On a month-on-month basis, the IPI contracted 8%, with export-oriented industries decreasing 10.2%. Socio-Economic Research Centre executive director Lee Heng Guie told StarBiz that the April IPI data presages a weak start to the country's 2Q25 GDP growth and potentially indicates a weakening economy. He expects the front-loading of shipments to the United States under the 90-day reciprocal tariff pause to wane going into May and June. This was reflected in the IPI's April manufacturing index, which rose 5.6% following a 4% gain in March. The reciprocal tariffs portion of the Liberation Day tariffs comes into effect on July 9 following the announcement of a 90-day pause while the baseline tariff of 10% imposed on all goods imported into the United States remains and have been effective since April 5. Malaysia's reciprocal tariff rate was 24%. 'Pending the outcome of tariffs negotiation expected in July, the export-oriented industries are expected to grow moderately in tandem with the anticipated slowing global demand due to the tariffs impact. 'The implementation of the Sales and Service Tax (SST) expansion is expected to soften domestic demand, and hence impacting domestic-market oriented industries,' Lee added. The expanded SST, which would be effective July 1, covers an additional six services categories while there would be higher sales tax rates on selected imported luxury goods. Meanwhile, the April manufacturing data showed manufacturing sector sales value rising 4.8% in April to RM160.6bil compared to the same month a year ago after growing 3.7% in March. Electrical and electronics (E&E) products saw sales value expand 9.8% after increasing 7.4% in March. Month-on-month, sales value dropped by 2.3% compared to RM164.3bil in March. April sales value growth of the export-oriented industries, which accounted for 70.3% of total sales, rose 5.3% compared to the same month a year ago after increasing 4.6% in March. Sales value growth of computer, electronics and optical products increased 10.6% from the same month a year ago after rising 8% in March. On a month-on-month basis, export-oriented industries' sales value growth saw a decline of 3.2%. E&E veteran and Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said the direction of US tariff policy, global economic growth and the ongoing supply-chain shifts would continue to have an impact on the country's manufacturing sector outlook. 'We need to see the outcome of the negotiations on the reciprocal tariffs to know better the impact on E&E, the tariff levels and how we can prepare for it. 'What we can say for now is that Malaysian companies have benefitted US companies in the half-century that we have worked together and that this relationship should continue,' he said. Wong noted that Malaysia has been a beneficiary of the supply-chain shifts related to the US-China trade rivalry in recent years and may continue to benefit as businesses plan for various outcomes, including on policy uncertainty and geopolitical uncertainty. 'There are many plus one strategies today, not just China+1 but also Europe+1,' he said. Wong said the E&E growth outlook would also hinge on global economic growth, which the World Bank projected to be 2.3% for the year, or nearly half a percentage point lower than projected at the start of the year on heightened trade tensions and policy uncertainty in its latest Global Economic Prospects report. 'Growth for E&E will depend on the sub-sector, we are still seeing demand in artificial intelligence, but this could slow in consumer electronics,' he said. MIDF Research expects IPI growth of 2% this year after the 3.7% increase in 2024, with front loading providing a temporary boost to trade activities and support industries vulnerable to external headwinds. 'Although there could be short term support following the United States decision to pause from implementation reciprocal tariffs, encouraging progress from the ongoing trade talks will be crucial to reduce the adverse impacts of trade tensions on future demand outlook and production activities,' the research house said.
