KUALA LUMPUR: Donald Trump's presidency could have a short-term moderate effect on Malaysia's energy, technology, and manufacturing sectors, including trade and exports, according to Ahmad Fidauddin, senior equity and derivatives dealer at Moomoo Securities Malaysia Sdn Bhd (Moomoo Malaysia).
He said that new US policies are expected to favour traditional energy sectors, supporting fossil fuel industries, and easing regulations.
"For Malaysia, this aligns with the strengths of its oil and gas sector, helping the FBM Energy Index, which is currently sitting at around 840.90 points, as oil demand is expected to go up.
"With the US potentially scaling back renewable energy incentives in favour of traditional fuels, Malaysian petroleum companies are well-positioned to capitalise on this shift, potentially seeing boosted export figures as US policies prioritise oil and gas reliance," he said.
On trade and export-dependent sectors, Ahmad said that US protectionist policies could pose challenges for Malaysia's export-driven economy, especially for sectors like palm oil, electronics, and rubber.
"The FBM Plantation Index, which includes major palm oil companies, is vulnerable to fluctuations as increased tariffs could affect competitiveness in the US market.
"Similarly, electronics companies under the FBM Technology Index may see pressures on exports if trade restrictions tighten.
"Companies within these industries may face cost pressures and demand shifts, underscoring the importance of exploring alternative export markets to offset potential reductions in US orders," he added.
For the technology and manufacturing sector, he noted that Trump's emphasis on boosting domestic manufacturing in the US may disrupt global supply chains, particularly for the semiconductor industry, where Malaysia holds a strong position.
He added that analysts are optimistic over the FBM Technology Index in the long run, although it has declined in the past few months due to massive global selldowns.
However, Ahmad said it may face challenges if new US policies encourage domestic sourcing of components.
"Conversely, Malaysian technology companies could mitigate these effects by strengthening partnerships within Asia, especially with countries in high-growth markets in Asia that continue to demand advanced tech components," he added.
CGS International said that Malaysia's manufacturing sector, especially gloves, could face significant positive changes during Donald Trump's second term.
The firm also projects a substantial decline in the US Federal Reserve's (FFR) interest rate.
Trump's key objectives include reducing outsourcing and bringing manufacturing back to the US.
He has also proposed tariffs as high as 60 per cent on Chinese imports to the US, with potential 20 per cent tariffs on other regions.
CGS International believes the glove sector might weather a 20 per cent tariff due to anticipated increases in tariffs on Chinese glove imports, which are set to reach 50 per cent in January 2025 and 100 per cent in January 2026.
"A loss in market share for Malaysian glove manufacturers would essentially come if US manufacturers are able to be competitive enough with a 20 per cent tariff protection.
"Considering the large differences in US and Malaysian wages, rents and other operating costs, we think that Malaysian glove manufacturers could still be competitive vis-à-vis US companies," it said.
CGS International does not expect any material tariffs on commodity exports, although Trump's policy on enabling greater US fossil fuel production could put pressure on oil prices.
On a positive note, higher tariffs on Chinese imports might prompt China+1 investments into Malaysia, while western multinational companies are unlikely to scale back multi-year investments in the country.
As Trump's policies could drive inflation and affect the trade deficit, CGS International indicated that US yields might spike, potentially strengthening the dollar.
However, with the FFR currently at 5.0 per cent, the firm doubts Trump would favour high interest rates due to their effects on housing, household affordability, commercial real estate, and small businesses.
"Hence, we maintain that the FFR should trend a lot lower (towards 3.0 per cent) over the next 12 to 15 months, bringing down the whole yield curve, albeit potentially with some steepening at the long end.
"Despite the initial knee-jerk reaction, we think the US dollar index (DXY) should ease over the medium term (if US manufacturing is to be competitive), providing room for further ringgit appreciation," it said.