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...
Bank Negara Malaysia (BNM) cautioned that businesses are facing a more challenging environment in the second half of 2025, as rising cost pressures and global uncertainties threaten profit margins and export performance.
In its Financial Stability Review, the central bank said new domestic policy measures have raised operating costs, while ongoing global trade tensions and supply chain disruptions continue to weigh on sentiment.
Higher Costs Squeeze Margins
BNM said the expansion of the sales and service tax (SST), higher electricity and water tariffs, and mandatory EPF contributions for foreign workers have all taken effect this year — putting pressure on corporate margins.
The median cost of goods sold (COGS) as a share of revenue rose to 75.4%, up from 74.9% at the end of 2024, reflecting tighter margins across sectors.
“Larger firms remain better positioned to manage these headwinds, supported by stronger balance sheets compared to pre-pandemic levels,” BNM said.
However, small and medium enterprises (SMEs) with pre-existing vulnerabilities are showing signs of financial strain, with some drawing down cash reserves to cover rising expenses and slower collections.
SME Stress Rising
According to the report, some SMEs have reported lower revenues and weaker profitability, exacerbated by stiffer competition and shorter payment terms.
Banks remain vigilant over these segments, especially where borrowers are more exposed to elevated input costs.
Despite the pressures, BNM expects moderating raw material prices and cost management efforts to help cushion the impact on businesses over time.
Domestic Demand Still a Key Support
The central bank noted that Malaysia’s resilient domestic demand, strong electrical and electronics (E&E) exports, and recovering tourism sector should continue to underpin business activity.
“Strong domestic demand and continued investment activity will remain key pillars supporting business resilience,” BNM added.
Key Takeaways for Investors
Margins under pressure: Input cost inflation and policy-driven expenses weigh on profitability.
SME risk rising: Smaller firms face liquidity stress; banks may tighten lending to vulnerable sectors.
Macro support intact: E&E exports, tourism, and local consumption continue to buffer growth.
Outlook:
While cost challenges persist, Malaysia’s diversified domestic demand base and investment momentum are expected to prevent a broad-based downturn — keeping the business sector resilient, albeit under strain.
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