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When Anwar Ibrahim became Malaysia’s 10^th prime minister on 24 Nov 2022, the KLCI was at 1,450 points. Shortly after that, the KLCI started drifting lower and fell to a low of 1,374 on 6 Aug 2023. From there, the KLCI embarked on a 15-month rally and rose more than 22% to touch 1,684 points on 3 Sep 2024 – a decent rally. However, the mood then reversed and the KLCI has been drifting downwards since then. By 12 Mar 2025, the KLCI has almost given up all the gains it made when it hit 1,478 points (figure 1).

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A few factors have been adversely affecting the trend of the KLSE. One is the Ringgit/US$ exchange rate which has been influenced by the differential between Malaysia’s Official Policy Rate (OPR) and America’s federal funds rate. Foreign funds flowed in in anticipation of the rate differential narrowing which it did. This also led to the Ringgit strengthening against the US$. These boosted the KLSE until around Sep/Oct 2024 when the local and global environments changed.

Trump won in the Nov 2024 US presidential election. His victory changed the shorter-term outlook dramatically. At the same time, America’s inflation stopped declining; investors who were earlier forecasting multiple rate cuts by the Federal Reserve have to quickly reverse their dovish forecasts. Investors and central bankers then focused on Trump’s victory and his promises of launching a barrage of tariffs. Almost everyone expects Trump’s tariffs t