Trump’s re-election as US president promises more volatility ahead for US-China relations and its impact on the global economy as well as financial markets. — Reuters
As in recent years, geopolitical concerns will continue to be on investors’ radar in 2025, especially with Donald Trump’s re-election as US president and what many believe could be more confrontations with China over trade and technology.
This is against the backdrop of a strong finish in the number of domestics IPOs in 2024 together with the solid amount raised.
Mirroring this bullish sentiment is Bursa Malaysia’s target to have 50 IPOs this year. The government expects the economy to expand by 4.5% to 5.5% this year, with recovery in global trade and resilient domestic spending to support growth.
According to Bank Negara, investment activity would be sustained by continuing projects, higher realisation of approved investments and the implementation of catalytic initiatives under the national master plans.
A major policy shift in the country in 2025 would be the RON95 petrol subsidy rationalisation, which is taking place in the second-half of the year and expected to save up to RM8bil annually as the subsidy would be targeted to 85% of the population.
In 2023, the government’s RON95 petrol subsidy amounted to RM20bil.
Savings from the rationalisation would be used for improving educational, healthcare and public transportation facilities.
Consumers may feel the pinch of rising prices as a result of the petrol subsidy rationalisation, with Bank Negara projecting between 2% and 3.5% inflation rate.
Analysts expect the overnight policy rate (OPR), used as a benchmark for lending and deposit rates, to be maintained at 3% throughout the year. The OPR has remained at the 3% level since May
2023, when Bank Negara raised it by 25 basis points from 2.75%.
Malaysian and non-Malaysian investors who receive RM100,000 and above in dividend per annum will be taxed 2% from the beginning of this year as the government continues to implement fiscal reforms, including measures to widen the tax base.
Another tax measure to bring in more revenue is the wider scope of the Sales and Service Tax, which would be implemented from May in 2025.
To round off what to expect this year, economists expect Malaysia to continue benefitting from the ongoing US-China trade war, which many expect to escalate.
To mitigate risks, foreign multinational companies would continue to diversify their supply chain, which sits well with the government’s strategy of attracting investments for regional industrial hubs.
But economists also caution that escalating geopolitical conflicts could be a major risk to supply-chain disruptions in 2025.
