KUALA LUMPUR, April 9 (Bernama) -- Bursa Malaysia closed lower on Thursday following the weaker performance of regional peers. The relief rally spurred by yesterday’s ceasefire quickly lost momentum as investors reassessed the credibility and sustainability of the United States-Iran truce. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) declined 10.07 points to 1,686.24 from Wednesday’s close of 1,696.31. The benchmark index, which opened 3.66 points lower at 1,692.65, moved between 1,680.01 and 1,692.65 during the day. In the broader market, losers trounced gainers 651 to 430, while 540 counters were unchanged, 1,087 untraded and 12 suspended. Turnover eased to 3.05 billion units worth RM2.83 billion from Wednesday’s 3.77 billion units worth RM3.64 billion.
Emerging markets suffered a sharp reversal in capital flows in March, with investors pulling out US$70.3 billion, marking the largest outflow since the Covid-19 market crash in 2020.
Massive Equity Selloff Led by Asia
Data from the Institute of International Finance showed that equities accounted for the bulk of the outflows, with US$56 billion withdrawn — the largest equity exodus in at least two decades.
The selloff was heavily concentrated in emerging Asia, which absorbed most of the equity withdrawals following strong inflows earlier in the year.
This reversal represents a “sharp regime break”, triggered by geopolitical shocks linked to the Iran conflict.
Oil Shock and Tech Repositioning Drive Risk-Off Shift
The outflows were driven by a combination of factors:
- Oil prices surged ~50% to above US$100, raising inflation concerns
- Investors reduced exposure to technology-linked equities, a key driver of Asian markets
- Overall risk appetite weakened sharply
Markets that had rallied strongly earlier in 2026 were hit hardest. For instance, South Korean equities, which gained nearly 50% earlier in the year, gave up more than a third of those gains after the conflict began.
Debt Markets More Resilient, China Sees Inflows
While equity outflows dominated, fixed income flows were more stable:
- Debt outflows totaled US$14.2 billion, significantly smaller than equities
- China recorded US$2.5 billion in inflows, showing relative resilience
- Latin America equities attracted US$1.4 billion, bucking the broader trend
This suggests the selloff was not a full-scale systemic crisis, but rather a targeted risk-off move.
Structural Risks for Emerging Markets
The International Monetary Fund has warned that many emerging markets now rely heavily on foreign institutional capital, including hedge funds and pension funds.
This increases vulnerability to rapid capital outflows during periods of stress, amplifying market volatility.
Outlook: Peak Liquidation or Deeper Pain?
Analysts suggest March could represent the peak of liquidation, if geopolitical tensions ease.
However, risks remain elevated:
- Higher inflation from energy prices
- Delayed global rate cuts
- Stronger US dollar
- Reduced policy flexibility in emerging markets
If the conflict persists, capital outflows could intensify further, putting additional pressure on emerging economies.
Investor Takeaways
- Emerging markets saw US$70.3 billion in outflows, the largest since 2020.
- Asia equities were hardest hit, driven by oil shocks and tech sector repositioning.
- The selloff reflects a sharp shift to risk-off sentiment, not yet a full systemic crisis.
- China and Latin America showed relative resilience, with selective inflows.
- Future flows depend heavily on geopolitical developments, oil prices, and global monetary policy.
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