Cautious Trading Ahead of US Tariff Deadline
Bursa Malaysia concluded Monday’s trading session on a subdued note, as it pared earlier gains and closed lower. This shift in momentum was largely driven by a more cautious investor sentiment, ahead of the impending US tariff negotiation deadline on August 1. The FTSE Bursa Malaysia KLCI (FBM KLCI) ended the day down by 4.38 points, or 0.29 percent, settling at 1,529.38. Despite opening the day on a firmer note, the index gradually lost momentum throughout the afternoon, reflecting the market’s unease. In the broader market, the number of declining stocks surpassed the number of advancers, though overall turnover saw an improvement to three billion units valued at RM2.30 billion. Mohd Sedek Jantan, the head of investment research at UOB Kay Hian Wealth Advisors Sdn Bhd, noted that while the FBM KLCI began the week with some strength, the gains were ultimately unsustainable. He attributed this to investor caution, as market participants chose to favor domestically oriented sectors like plantation and utilities, which are seen as less exposed to external uncertainties.
Mixed Regional Performance and Market Consolidation
The cautious sentiment in the Malaysian market was part of a mixed performance seen across regional markets on Monday, which were collectively influenced by profit-taking activities and broader global trade concerns. While some markets showed strength, others struggled. For example, Hong Kong’s Hang Seng Index and South Korea’s Kospi both registered gains, rising by 0.68% and 0.42% respectively. In contrast, Singapore’s Straits Times Index fell by 0.27%, and Japan’s Nikkei 225 shed 1.10%. Thong Pak Leng, the equity research vice-president at Rakuten Trade Sdn Bhd, explained that the local benchmark index’s close below the 1,530 level was a result of late-session selling and a general wait-and-see attitude. Investors are currently holding back as they await more specific details from the upcoming US-China trade discussions in Stockholm. This lack of fresh, positive catalysts has left the local bourse in a consolidation phase, which is expected to continue in the near term as market participants search for new direction.
Strategic Sector Performance and Future Outlook
Thong Pak Leng suggested that due to the lack of new catalysts, the FBM KLCI is likely to remain in a consolidation phase, trading within a range of 1,510 to 1,540 points for the week. He also provided a strategic tip for investors, noting that crude palm oil (CPO) futures remaining above RM4,000 per tonne presents an attractive opportunity to accumulate plantation stocks. This sector, along with industrial products and services and energy, showed modest gains on Monday, signaling resilience amid the overall market downturn. In contrast, the Financial Services Index saw a notable decline, indicating some pressure on the banking and financial sector. Despite the overall market’s cautious mood, several actively traded stocks, such as Ekovest, NexG, and Tanco, managed to post gains, while others, including Zetrix AI and YTL Corporation, saw dips. The performance of these individual stocks highlights a fragmented market where opportunities and risks are not uniformly distributed. The market’s near-term trajectory will largely depend on the outcome of the US-China trade talks and any related announcements.
