KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
Tariffs and Tokens – The New U.S. Playbook
Washington’s trade and monetary strategy is becoming increasingly intertwined. The U.S.–China tariff truce, extended for 90 days earlier this month, locks in a 10% baseline tariff with “reciprocal” rates ranging up to 50%, including Malaysia’s US$150 billion equipment purchase package and annual US$3.4 billion LNG commitment via Petronas. Indonesia, meanwhile, accepted a fixed 19% tariff in its bilateral deal.
But U.S. President Donald Trump’s warning of “irreversible losses” and even a “1929-style depression” if courts overturn his tariff powers underscores that law and politics have become a core component of market risk premia.
Parallel to tariffs, the GENIUS Act (July 2025) has reshaped the stablecoin ecosystem. By mandating 1:1 reserves in high-quality liquid assets, stablecoins now effectively channel demand into U.S. Treasuries, embedding fiscal engineering into digital code. Treasury Secretary Scott Bessent has openly argued that compliant stablecoins reinforce demand for government debt — effectively linking digital adoption with sovereign debt sustainability.
October Summits: Diplomacy Meets Monetary Policy
After Fed Chair Jerome Powell’s Jackson Hole comments boosted market-implied odds of a September rate cut above 90%, the risk is that a hold decision could trigger a 10–15% equity correction. Some analysts believe Trump may deliberately delay easing until the Asean (Oct 26–28, Kuala Lumpur) and Apec (Oct 31–Nov 1, Seoul) summits, using monetary policy as a diplomatic bargaining chip with Beijing.
This creates a dual-pressure scenario for investors:
Tariffs as the stick: keeping leverage on Asia-Pacific exporters.
Rate cuts as the carrot: a negotiating tool to shape trade concessions.
If Xi Jinping skips the Asean summit as reports suggest, it signals strategic choreography — negotiations will be transactional, not ceremonial.
China’s Parallel Strategy: Quiet but Calculated
Beijing continues to roll out digital yuan pilots and Hong Kong stablecoin trials, but without mandating adoption. Instead, it provides multi-rail payment systems, clearinghouses, and commodity-linked settlement frameworks. This optionality-based strategy appeals to Gulf and Asean economies seeking flexibility rather than confrontation.
Beijing’s subtle message: it doesn’t need to displace the dollar — it just needs to offer a practical alternative.
Asean’s Balancing Act
Regional governments are adjusting via diversification and negotiation:
Malaysia: balancing tariffs with LNG and semiconductor trade-offs.
Vietnam: still in tariff talks with Washington.
Indonesia: secured stability with a fixed-rate deal.
Malaysian Prime Minister Anwar Ibrahim’s call for a “civilisational cooperative financial architecture” underscores the urgency: without regional frameworks, Asean’s financial flows risk being governed by U.S. code, not regional priorities.
Rare Earths: China’s Silent Leverage
With 85% of global rare earth processing under Chinese control, even modest regulatory changes could destabilize defense, clean tech, and semiconductor supply chains. If U.S. tariff escalation continues, it risks pushing trade partners deeper into China’s ecosystem, spanning not only goods but also digital settlement standards.
Investment Implications
Short-Term Risks
Equities: A U.S. hold in September could shock risk assets, triggering a 10–15% correction.
FX: Asean currencies may see increased volatility if digital-dollar stablecoins dominate settlements.
Commodities: LNG demand is underpinned by Malaysia’s Petronas deals, but rare earth supply remains a geopolitical tail risk.
Medium-Term Shifts
Malaysia: Strong potential as a regional clearing hub if it aligns with emerging multi-currency frameworks. Bond inflows could accelerate if October summits deliver clarity.
Electronics & Energy: With E&E exports worth US$121B in 2024, Malaysia’s electronics sector sits at the front line of tariff and settlement shifts. Petronas’ LNG commitments anchor energy trade flows.
Digital Finance: Asean financial sovereignty will hinge on how much adoption is ceded to U.S.-compliant stablecoins versus China’s multi-rail alternatives.
Conclusion
Global influence will rest less with those issuing the loudest threats and more with those designing systems — monetary, legal, digital — that others are compelled to join. For investors, October’s Asean and Apec summits will be a critical inflection point: clarity on tariffs, rates, and digital settlement rules could stabilize markets, while prolonged ambiguity risks further entrenching U.S.–China rivalry into the financial plumbing of Asia.
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