KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Japanese automakers are slashing vehicle export prices to the United States at record levels to stay competitive under President Trump’s 25% auto tariff — even if it means sacrificing profit margins.
Record Price Drop
The export price index for Japanese vehicles shipped to North America fell 19.4% YoY in June, the sharpest decline since 2016, according to the Bank of Japan (BOJ).
This marks a strategic pricing move to absorb the tariff shock without passing costs to US consumers.
Key Insights
The move highlights Japan’s reluctance to raise prices, a tactic aimed at preserving US market share despite rising costs.
Automakers like Subaru Corp. have raised prices modestly but are still largely absorbing the hit.
Car exports to the US fell 24.7% by value, but only 3.9% by volume in May — proving the price cuts are working to maintain demand.
BOJ's Dilemma
BOJ Governor Kazuo Ueda is watching closely:
“Whether the wage-inflation cycle can be sustained despite US tariffs will influence the next rate hike decision.”
The central bank is balancing:
Sustaining inflation
Maintaining wage growth
Reacting to weakening profitability in export-heavy sectors
Producer Price Trends
June Producer Price Index (PPI) rose 2.9% YoY, easing from 3.3% in May, as oil and steel prices declined.
Outlook for Automakers
While Japan's export strategy might soften the consumer blow, it raises questions about earnings resilience in coming quarters.
Investors should monitor:
Further US tariff escalation (tariffs across all Japanese goods rise to 25% from Aug 1)
BOJ's potential rate policy response
Automakers’ ability to maintain wage increases under profit pressure
Final Thought:
Japan’s auto sector is in defense mode — shielding its global market position by eating into margins. A long game, but a risky one if tariffs stay elevated.
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