KUALA LUMPUR, Dec 16 (Bernama) -- Bursa Malaysia extended its positive performance, closing higher for a fourth consecutive session, supported by improving local market sentiment underpinned by a firm domestic macroeconomic backdrop. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.59 points, or 0.28 per cent, to 1,648.31, from Monday’s close of 1,643.72. The index had opened 0.95 of a point lower at 1,642.77, and moved between 1,636.50 and 1,648.71 throughout the trading session However, on the broader market, decliners beat gainers 699 versus 408. A further 520 counters were unchanged, 1,149 untraded and 12 suspended. Turnover rose to 2.59 billion units worth RM2.27 billion from 2.50 billion units worth RM2.16 billion on Monday.
Key Takeaways:
The US Commerce Department has warned Italy that Sinochem’s 37% stake in Pirelli may conflict with US connected-vehicle rules.
Despite Italy’s 2023 restrictions curbing Sinochem’s influence, Washington sees protections as insufficient, signaling a hardening stance.
Pirelli relies heavily on the US, generating ~25% of sales there, with its Cyber Tyre system a key driver of growth.
Pirelli shares fell 1.8% in Milan after the report; YTD performance remains up 8%, in line with the Stoxx 600.
US Raises Direct Concerns
The US Bureau of Industry and Security (BIS) issued a letter in July to Italian officials warning that Rome’s golden-power restrictions imposed last year do not adequately shield Pirelli from potential US restrictions tied to its Chinese ownership. The communication highlights an escalation, as Washington is now directly pressing Italy on the matter.
Sinochem Holdings, a Chinese state-owned enterprise, inherited its 37% stake in Pirelli via its 2017 merger with ChemChina. While the Italian government has diluted Sinochem’s formal governance powers, BIS maintains that influence remains a concern.
Strategic Importance of Cyber Tyre Technology
Pirelli’s Cyber Tyre connected-tire technology, seen as crucial to future revenue, is at the heart of the dispute. The US previously indicated that automakers using Pirelli’s sensor-embedded tires may require special authorisation to sell vehicles domestically.
CEO Andrea Casaluci has publicly warned that without an agreement with Sinochem, both technology development and US expansion could be at risk.
Market Impact and Policy Tensions
Pirelli shares slipped 1.8% on the report, though the stock is still up 8% in 2025, matching the broader Stoxx 600 index. The market reaction underscores investor sensitivity to governance and geopolitical risks.
Meanwhile, Prime Minister Giorgia Meloni’s government is weighing broader measures to limit Chinese stakes in strategic Italian companies, in an effort to align with Washington and reduce tensions.
Outlook for Investors
The renewed scrutiny raises critical questions:
Market access: Unresolved governance issues could impair Pirelli’s ability to expand in the US.
Shareholder dynamics: While Sinochem has stated it does not plan to sell, mounting political pressure may force changes in its stake.
Geopolitical overhang: With the US hardening its stance and Rome considering new restrictions, investor risk premium on Pirelli could rise.
Bottom Line: Pirelli faces heightened geopolitical and governance headwinds. While fundamentals remain supported by strong product innovation, the US pushback on Chinese ownership introduces uncertainty around future US sales growth. Investors should monitor Rome’s next steps and potential shareholder restructuring as key catalysts.
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