KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
When former President Donald Trump threatened a 200% tariff on imported pharmaceuticals, the natural expectation was a sell-off in healthcare stocks. Instead? The NYSE Arca Pharmaceutical Index rose 1% over the past week, outperforming the S&P 500.
Why? Investors are betting the blow will be delayed, softened — or sidestepped entirely.
Trump’s Tariff Threat — But with a Long Runway
Trump proposed a 1 to 1.5-year grace period, which could effectively push implementation out to 2027, with companies possibly stockpiling enough to delay impact until 2028.
According to Jefferies:
“If firms stockpile effectively, the earnings hit could be milder than expected — even better than past projections for a 25% tariff.”
Pharma Already Taking Action
Two key moves are underway:
Stockpiling: Hormone treatment imports from Ireland more than doubled YoY (US$36 billion YTD).
U.S. Manufacturing Shift:
Eli Lilly: Announced a US$27B investment in U.S. production.
Merck: Plans to manufacture the next-gen Keytruda domestically.
Trump’s “Big Beautiful Bill” Makes It Easier
Trump’s economic policy is also carrot, not just stick:
Immediate deduction of R&D and equipment costs
Higher cap on interest deductibility
Net: Cheaper to build plants in the U.S., reducing the long-term tax burden
Minimal Earnings Impact?
Jefferies estimates a 1%–2% EPS hit to Merck in 2027–2028 — less than what a smaller 25% tariff would have done.
“The market's not shrugging it off. It’s factoring in the workarounds.”
M&A Activity Is Back
Dealmaking signals confidence:
Merck: US$10B acquisition of Verona Pharma
Eli Lilly: US$1.3B acquisition of Verve Therapeutics
The pharma industry seems to be adapting quickly — with or without tariffs.
Investor Takeaways
Don’t overreact to headlines — timing and implementation matter more than numbers.
Watch for U.S. manufacturing plays — companies moving early could benefit most.
Tariff-driven localization may reshape supply chains, possibly boosting select industrial and healthcare infrastructure names.
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