On Wednesday, most Asian stocks and currencies experienced declines, as investors voiced concerns over uncertainties in global trade and fluctuating U.S. tariff plans. Malaysian stocks led the downward trend, marking their fifth consecutive day of losses and reaching a low not seen in over a year.
This has made the Malaysian market the worst performer in the region, with a notable 9.5% drop this year alone. The fears of a global trade war escalated when U.S. President Donald Trump announced plans to impose a 50% tariff on metals imported from Canada.
According to analysts at United Overseas Bank (UOB), the uncertainties surrounding global trade policies are expected to hinder global growth, inflation, and monetary policy outlook, thereby affecting capital flows worldwide in the near future. These trade-related concerns have led to increased foreign portfolio outflows from Malaysia for five consecutive months, with outflows continuing to widen in February.
In response to these challenges, Bank Negara Malaysia maintained its key interest rate during the last week’s meeting, following the lead of Bangko Sentral ng Pilipinas. Meanwhile, both Indonesia and Thailand have opted to cut their policy rates this year.
UOB analysts suggest that current market sentiment favors risk-off strategies, with capital likely heading toward nations exhibiting macroeconomic stability and consistent policies, while showing less vulnerability to potential tariffs. Jessica Amir, a market strategist at Moomoo Australia, predicts a repeat of the scenarios seen in 2018, advising that markets globally should prepare for a downward adjustment in earnings growth and a fall in stock valuations.
In the mixed movements of Asian equities, shares in Manila and Thailand fell 0.2% and 1.9% respectively, while Indonesian stocks rose by 1.6%, and Singapore’s market traded 0.3% higher. Overall, the Asian market trend in 2025 shows a decline, with Thai shares down 16.8%, while South Korean equities have outperformed, gaining 7.3%.
The Malaysian ringgit fell significantly, losing 0.5%, followed by the Thai baht and Indonesian rupiah. Furthermore, the dollar index remains near a five-month low amid growing concerns regarding the U.S. economy, with potential further rate cuts from the Federal Reserve likely to exert additional pressure on the dollar.