KLCI extends weekly gains despite SST, geopolitical concerns
KUALA LUMPUR: The Kuala Lumpur Composite Index (KLCI) recorded its second straight weekly gain, edging up by 0.1 per cent on a week-on-week (WoW) basis.
According to CIMB Securities Sdn Bhd, the uptick came in the wake of news that the United States and China had reached an agreement on a framework to implement their trade truce on June 11.
"However, the positive momentum was partially offset by concerns over Malaysia's expanded Sales and Service Tax (SST)'s potential impact on corporate earnings and rising geopolitical risks after Israel launched strikes on Iranian military and nuclear sites, including in central Tehran, on June 13," it added.
Meanwhile, the average daily trading value (ADTV) increased by four per cent WoW to reach RM2.1 billion.
CIMB Securities said in the first quarter of 2025, real estate investment trusts (REITs) within its coverage posted earnings that met expectations.
The sector's core net profit (CNP) saw a 13 per cent year-on-year increase, largely supported by acquisitions completed during the 2024 financial year.
"However, we observed signs of weaker consumer sentiment, reflected in lower variable rent contributions among retail REITs.
"We expect a more challenging second half of 2025 (2H25), with potential headwinds from the expanded SST and a possible review of electricity tariffs," it adds.
CIMB Securities expressed a preference for Axis REIT, citing its strong upside potential, relatively steady cost structure, and a robust portfolio of tenants.
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The Star
7 hours ago
- The Star
China offers to be peacemaker in Iran-Israel war, but is unlikely to intervene
BEIJING (The Straits Times/ANN): As the conflict between Israel and Iran stretches beyond a week, China has found itself sidelined in developments that could yet have far-reaching consequences for its interests in the Middle East. While Beijing has offered itself as a peacemaker, it is unlikely to wade into the conflict directly, or to supply arms to Iran, say analysts. This is because it wants to avoid confronting the United States, for which military intervention against Iran remains a real possibility. Chinese President Xi Jinping, in a phone call with Russian President Vladimir Putin on June 19, said China is willing to continue to strengthen communication with all parties and 'play a constructive role in restoring peace in the Middle East'. Hours later, US President Donald Trump effectively gave Iran two weeks to return to the negotiating table to discuss the future of its nuclear programme, by saying he would decide whether the US would attack Iran in that timeframe. With Iran seriously weakened by the latest hostilities – its top military commanders have been killed, and key nuclear facilities damaged – observers believe the initiative remains with Israel and the US. At stake for China is energy imports. China is the largest buyer of Iranian oil. Iran has also threatened to block the Strait of Hormuz, which lies between Iran and Oman and is a major route for oil and gas shipments from the Gulf states to China, including from Saudi Arabia, China's biggest supplier of crude after Russia. Even so, beyond issuing diplomatic statements, China is unlikely to intervene, said analysts. While some have touted China's growing influence in the Middle East, particularly after it brokered a landmark normalisation deal between archrivals Saudi Arabia and Iran in 2023, it has little appetite to be embroiled in the region's conflicts. Associate Professor Jonathan Fulton, an expert in China's relations with the Middle East, said China's interests in the Middle East are primarily economic, noting also that it buys much more oil from countries such as Saudi Arabia and Oman than Iran. 'When China looks at Iran, I think they see a partner of limited economic value,' he said. 'They also see a country that, through its proxies or its own aggressive behaviour, has destabilised a lot of the Middle East.' Another major reason for China's inaction is that it does not want to antagonise the US, said Prof Fulton, who is non-resident senior fellow at the Atlantic Council, a US think-tank. 'Much like the logic with Ukraine – if China gives weapons to Russia and Russia uses them to attack Ukraine, this is going to provoke Nato and make China an enemy in the eyes of countries that it wants to have good economic and political relations with,' he added. Chinese officials have repeatedly called for a ceasefire since Israel began a major offensive against Iran on June 12 to cripple Tehran's ability to develop nuclear weapons, seen by Israel as a threat to its security. Since that first salvo, there have been tit-for-tat air strikes between the two countries, an ongoing conflict that could yet lead to the overthrow of the leaders of the Islamic republic. China's Foreign Minister Wang Yi has suggested through phone calls to his counterparts in the Middle East – Iran and Israel, as well as Egypt and Oman which are involved in mediation efforts – that China is willing to coordinate with regional countries for peace. Dr Clemens Chay, a research fellow from the Middle East Institute at the National University of Singapore, said: 'Beyond the perfunctory statements and calls by Chinese officials, it is unlikely Beijing will stick its hand in – certainly not militarily – in the ongoing tit-for-tat strikes between Iran and Israel.' Given that China has energy interests in the region, including in Iranian oil, the logical approach for it would be to call for de-escalation, he said. 'But to deploy its forces will be too much of an ask.' Dr Andrea Ghiselli, a lecturer in international politics at the University of Exeter who focuses on Chinese foreign policy in the Middle East, said Mr Wang's phone calls should be read as a way for China to get a better read of the situation. China is probably seeking to understand how regional powers and countries like Russia are preparing for a possible collapse of the regime in Iran and the consequent emergence of Israel as a regional hegemon, said Dr Ghiselli, who also heads research at the ChinaMed Project of the Torino World Affairs Institute, an Italian think-tank. A possible regime change in Iran – which Israeli Prime Minister Benjamin Netanyahu has said could happen, even if his government does not aim to bring it about – would also not likely be welcomed by China, not least because the next leadership may be less predictable. Dr Gedaliah Afterman of Reichman University in Israel said a quick collapse of the regime or power vacuum would threaten China's investments, infrastructure and strategic access across the region. 'Beijing prefers continuity and predictability, particularly given Iran's current economic dependence on China,' he added. He said the best-case scenario for China is a swift de-escalation that avoids direct US-Iran confrontation, preserves the existing regional order in which Beijing feels increasingly comfortable, and enables it to continue balancing relations with Iran, the Gulf and Israel. 'China may also seek to present itself as playing a role in any renewed nuclear agreement, even if only symbolically, especially if this comes at the expense of US influence in the region,' said Dr Afterman. - The Straits Times/Asia News Network
The Star
10 hours ago
- The Star
Expansion of SST burdens people and raises prices, says Dr Wee
PETALING JAYA: The expansion of the Sales and Services Tax (SST) will further burden the people and give businesses an excuse to raise prices, says MCA president Datuk Seri Dr Wee Ka Siong. He said that unlike the Goods and Services Tax (GST), the SST lacks transparency, consistency, and the capacity to generate sustainable revenue. 'The government's continued expansion of SST, likely due to fiscal pressure, is a burden to the people and gives businesses an excuse to raise prices. 'MCA urges the government to take these concerns seriously and consider the constructive feedback from all sectors,' he said on Facebook on Saturday (June 21). Dr Wee said that reintroducing the GST could ensure the stability and strength of the country. He said that the GST is widely recognised for its transparency and efficiency. 'A responsible approach would be to exempt certain SMEs and vulnerable groups from the policy, rather than just postponing the rollout. 'A delay is only a short-term fix. In fact, it should be seen as a starting point for reviving the GST,' he said at the E-Invoice Seminar hosted by the MCA Political Education Committee and School of Political Studies earlier today. Dr Wee added that if GST is implemented, the e-invoice function would be included in the taxation software. 'I emphasised that while the government announced a revised timeline for e-invoice implementation on June 5, simply delaying it won't solve the root issues. MCA is of the view that the e-invoice component is a subset of the GST system,' he added. Last week, Prime Minister Datuk Seri Anwar Ibrahim said that reintroducing GST would unfairly burden lower-income earners. He said the implementation of GST would mean the poor, including fishermen, smallholders, low-wage earners, and street vendors, would be taxed on everyday essentials. On June 9, the Finance Ministry announced that the reviewed and expanded SST rates would come into effect next month. The measure is aimed at strengthening the country's fiscal position by increasing revenue and broadening the tax base, the ministry said.
The Sun
12 hours ago
- The Sun
Middle East tensions put investors on alert, weighing worst-case scenarios
NEW YORK: Investors are mulling a host of different market scenarios should the U.S. deepen its involvement in the Middle East conflict, with the potential for ripple effects if energy prices skyrocket. They have honed in on the evolving situation between Israel and Iran, which have exchanged missile strikes, and are closely monitoring whether the U.S. decides to join Israel in its bombing campaign. Potential scenarios could send inflation higher, dampening consumer confidence and lessening the chance of near-term interest rate cuts. This would likely cause an initial selloff in equities and possible safe-haven bid for the dollar. While U.S. crude prices have climbed some 10% over the past week, the S&P 500 has been little changed as of yet, following an initial drop when Israel launched its attacks. However, if attacks were to take out Iranian oil supply, 'that's when the market is going to sit up and take notice,' said Art Hogan, chief market strategist at B Riley Wealth. 'If you get disruption to supply of oil product on the global marketplace, that is not reflected in today's WTI price and that is where things get negative,' Hogan said. The White House said on Thursday President Donald Trump would decide on U.S. involvement in the conflict in the next two weeks. Analysts at Oxford Economics modeled three scenarios, ranging from a de-escalation in the conflict, a complete shutdown in Iranian production, and a closure of the Strait of Hormuz, 'each with increasingly large impacts on global oil prices,' the firm said in a note. In the most severe case, global oil prices jump to around $130 per barrel, driving U.S. inflation near 6% by the end of this year, Oxford said in the note. 'Although the price shock inevitably dampens consumer spending because of the hit to real incomes, the scale of the rise in inflation and concerns about the potential for second-round inflation effects likely ruin any chance of rate cuts in the U.S. this year,' Oxford said in the note. OIL IMPACT The biggest market impact from the escalating conflict has been restricted to oil, with oil prices soaring on worries that the Iran-Israel conflict could disrupt supplies. Brent crude futures have risen as much as 18% since June 10, hitting a near 5-month high of $79.04 on Thursday. The accompanying rise in investors' expectations for further near-term volatility in oil prices has outpaced the rise in volatility expectations for other major asset classes, including stocks and bonds. But other asset classes, including stocks, could still feel the knock-on effects of higher oil prices, especially if there is a larger surge in oil prices if the worst market fears of supply disruptions come true, analysts said. 'Geopolitical tensions have been mostly ignored by equities, but they are being factored into oil,' Citigroup analysts wrote in a note. 'To us, the key for equities from here will come from energy commodity pricing,' they said. STOCKS UNPERTURBED U.S. stocks have so far weathered rising Middle East tensions with little sign of panic. A more direct U.S. involvement in the conflict could, however, spook markets, investors said. Financial markets may be in for an initial selloff if the U.S. military attacks Iran, with economists warning that a dramatic rise in oil prices could damage a global economy already strained by Trump's tariffs. Still, any pullback in equities might be fleeting, history suggests. During past prominent instances of Middle East tensions coming to a boil, including the 2003 Iraq invasion and the 2019 attacks on Saudi oil facilities, stocks initially languished but soon recovered to trade higher in the months ahead. On average, the S&P 500 slipped 0.3% in the three weeks following the start of conflict, but was 2.3% higher on average two months following the conflict, according to data from Wedbush Securities and CapIQ Pro. DOLLAR WOES An escalation in the conflict could have mixed implications for the U.S. dollar, which has tumbled this year amid worries over diminished U.S. exceptionalism. In the event of U.S. direct engagement in the Iran-Israel War, the dollar could initially benefit from a safety bid, analysts said. 'Traders are likely to worry more about the implicit erosion of the terms of trade for Europe, the UK, and Japan, rather than the economic shock to the US, a major oil producer,' Thierry Wizman, Global FX & Rates Strategist at Macquarie Group, said in a note. But longer-term, the prospect of US-directed 'nation-building' would probably weaken the dollar, he said. 'We recall that after the attacks of 9/11, and running through the decade-long US presence in Afghanistan and Iraq, the USD weakened,' Wizman said.
