Malaysia in Focus: 3 Potential Drivers That Global Investors Are Watching July 28, 2025

Malaysia in Focus: 3 Potential Drivers That Global Investors Are Watching

In mid-2025, global markets are once again caught in the crosshairs of geopolitical risk. The US has announced sweeping new tariffs targeting key Asian sectors, particularly semiconductors and electronics, as part of its strategic pivot to protect domestic industries and counter China’s global tech dominance. While this move is aimed at China, ASEAN economies like Malaysia are feeling the ripple effects, given their embedded roles within critical global supply chains.

Malaysia now finds itself at a crossroads. After a post-COVID economic recovery and a year of relative stability, external shocks ranging from trade policy to commodity price fluctuations are testing its economic resilience. Yet beneath the noise lies an evolving structural story, rising foreign investment, a transition towards digital and green industries, and proactive policy support quietly reshaping the country’s economic foundation.

So, how should investors position themselves in Malaysia’s stock market? Let’s break it down into 3 key points.


1. Navigating Tariff Risks with Policy Support

The US tariff wave set to take effect in Aug 2025 has injected new uncertainty into Malaysia’s trade outlook. Although Malaysia isn’t the direct target, its exposure to global semiconductor and electronics supply chains, particularly in Penang and Johor, puts export reliant companies at risk. In response, Malaysia is actively pursuing negotiations with the US to secure preferential tariff outcomes.

There are already signs of a slowdown, Malaysia’s GDP growth moderated to 4.4% in Q1 2025 and 4.5% in Q2 2025, reflecting softer export demand. In a bid to cushion the economy, Bank Negara Malaysia (BNM) adopted a more dovish stance of reducing the Overnight Policy Rate (OPR) to 2.75% in July recently. The rate cut was made to support the Malaysian economy amidst global economic uncertainties and a weaker growth outlook. BNM also lowered the Statutory Reserve Requirement (SRR) by 100 basis points in May, injecting RM19 billion into the banking system to support liquidity.

Malaysia in Focus: 3 Potential Drivers That Global Investors Are Watching


2. Domestic Resilience & Rising FDI Inflows

Malaysia’s underlying economic fundamentals remain resilient. Private consumption continues to hold up, supported by a relatively stable labour market and easing inflation. A key pillar of support lies in foreign direct investment (FDI). Despite a decrease in FDI to MYR 15.57 billion in Q12025 from MYR 18.68 billion in Q42024, the value of secured investment says otherwise.


Malaysia Foreign Direct Investment

Malaysia in Focus: 3 Potential Drivers That Global Investors Are WatchingDepartment of Statistics, Malaysia – Trading Economics

In Q12025, Malaysia secured RM89.8 billion (US$ 21 billion) in new investments, up 3.7% year-on-year. The largest contributors were Singapore, the US, and China, with a strong focus on services, manufacturing, and green technologies.

This isn’t a one-off event; it reflects a broader shift in global supply chains. As companies adopt “China-plus-one” strategies to diversify production, Malaysia’s political stability, solid infrastructure, and bilingual workforce are making it an increasingly attractive destination.

Malaysia in Focus: 3 Potential Drivers That Global Investors Are Watching


3. Structural Shifts: Green Economy & Digital Infrastructure

Beyond the cyclical narrative, Malaysia’s long-term growth story is evolving rapidly. The government’s industrial master plan and climate commitments are driving investments into renewable energy, digital infrastructure, and ESG compliance.

Notable initiatives include:

  • The Malaysia Green Technology Master Plan, which aims for 40% renewable energy capacity by 2035
  • The National Energy Transition Roadmap, with targeted investments in solar, hydrogen, and energy efficiency
  • Development of “Semiconductor Valley” under the Malaysia Vision Valley 2.0 project, supported by state and private capital


Meanwhile, tech giants and data centre operators are flocking to Johor, turning it into a regional digital hub. Companies like YTL Power International, TM (Telekom Malaysia), and various listed REITs are poised to benefit from infrastructure demand and urban transformation.

Malaysia in Focus: 3 Potential Drivers That Global Investors Are Watching


Want to learn more about these counters? Login with your POEMS account to use our Stock Screener

and Technical Insights!


Final Thoughts: Tactical Patience, Strategic Positioning

Malaysia’s stock market is often seen as a “middle ground” in Asia; less volatile than emerging peers, but more measured than fast-growing tech-heavy markets like Korea or India. In today’s climate, this middle ground could be a sweet spot.

Here’s a simplified strategic playbook:

Malaysia in Focus: 3 Potential Drivers That Global Investors Are Watching

While global headlines may be dominated by trade wars and macro uncertainty, Malaysia stands out as a market quietly recalibrating for long-term relevance. With a stable policy backdrop, increasing FDI, and a clear pivot toward future-proof industries like green energy and digital infrastructure, the country offers more than just defensive shelter, it offers upside potential.

For investors seeking value with structural catalysts, Malaysia is no longer just a cyclical rebound story. It’s a transition story from export-reliant to innovation-led, from policy reactive to policy proactive.

Now is the time to accumulate selectively, before the market prices in the next growth chapter. POEMS offers Malaysia Market trading from as low as 0.08%.

Start trading on POEMS!Open a free account here!

Malaysia in Focus: 3 Potential Drivers That Global Investors Are Watching

Trade Smarter and Faster With our newly launched POEMS Mobile 3 Trading App
Explore a myriad of useful features including TradingView chartings to conduct technical analysis with over 100 technical indicators available!

Take this opportunity to expand your trading portfolio with our wide range of products including Stocks, CFDs, ETFs, Unit Trusts and more across 15 global exchanges available for you anytime and anywhere to elevate you as a better trader using our POEMS Mobile 3 App!

Appendix:


Disclaimer

These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products.

Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance.

Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

About the author

Global Markets Desk (Asia Market)

The Global Markets Desk Asia Market Dealing team specializes in managing Asia Markets, covering key regions like Greater China, Malaysia, Japan, Thailand, and others. In addition to executing client orders, they also provide educational content through market journals and webinars, offering insights into macroeconomics, stock picks, and technical analyses for the Asia market landscape.

Related Articles

One Stock, Many Prices: Understanding US Markets One Stock, Many Prices: Understanding US Markets
Why Every Investor Should Understand Put Selling Why Every Investor Should Understand Put Selling
Will There be a US Recession by End 2025? Will There be a US Recession by End 2025?
Is the 60/40 Portfolio Still Relevant Today? Is the 60/40 Portfolio Still Relevant Today?
Market Journal

Join Events & Seminars

Learn best practices and latest market outlook from experts and special guests
Market Journal

Hear & Ask our Experts

Join live weekly market calls
Market Journal

Read Popular News & Reports, Technical Pulses

at www.poems.com.sg/stock-research
Market Journal

Subscribe to our YouTube Channel

New video every week

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com