KUALA LUMPUR (July 9): Malaysia could secure a 15% tariff rate under a potential trade deal with the United States, a figure notably lower than the 20% tariff recently agreed upon in Vietnam’s trade pact with the US, said MIDF Amanah Investment Bank.

The bank anticipates an agreement between the two countries before Washington’s Aug 1 deadline, emphasising that even at a higher combined tariff of up to 35% — incorporating the current 25% rate and a potential additional 10% BRICS-related tariff ’ Malaysia would still remain competitive relative to regional peers.  Indonesia and Thailand currently face tariff rates of 42% and 46%, respectively.

“Based on Vietnam’s latest trade agreement with the US, we expect that it will be lower than the tariff set for Aug 1, 2025. We believe Malaysia could land around a 15% level (from 25%),” it said in a note to clients. MIDF expects both countries to likely to reach an agreement ahead of Washington’s Aug 1 deadline. 

It noted that Vietnam previously secured a significant reduction in tariffs — from 46% to 20% — under its deal with the US. However, goods that are transshipped through Vietnam, particularly from China to evade US tariffs, will still be subject to a 40% duty.

The benchmark FBM KLCI slipped 0.07% at the opening bell to 1,529 on Wednesday, before rebounding to 1,530.24 as at 9.48am, up 0.01%. Gainers outpaced losers, with 280 gainers, 216 losers and 374 counters unchanged. Trading volume stood at 706.18 million shares, worth RM275.9 million.

CIMB Securities maintained its KLCI year-end target at 1,560 points, noting that the market has already priced in the impact of higher US tariffs. 

“We expect the KLCI to remain range-bound in the near term,” it said, adding that ongoing negotiations for a potentially lower tariff are helping limit downside risks.

“Additionally, foreign investors have been selling the market following the April 2 decision, which has capped further downside,” it added.

CIMB continues to favour domestic-oriented companies with stable dividend yields — especially in banking, telecommunications, utilities, construction, and healthcare — which could serve as a buffer against tariff-related headwinds. Its top stock picks include CelcomDigi Bhd (KL:CDB), Gamuda Bhd (KL:GAMUDA), Public Bank Bhd (KL:PBBANK), and 99 Speedmart (KL:99SMART).

CIMB expects the impact on export-driven earnings to become more visible in the coming months. In addition to trade-related risks, other domestic factors such as the sales and service tax (SST) expansion effective July 1, RON95 fuel subsidy rationalisation, and a potential water-tariff adjustment could weigh on corporate earnings in the second half of the year.

On another hand, CIMB raised concerns for the banks and port amid the 25% tariff. 

Although banks have minimal direct loan exposure to exporters, CIMB warned of indirect risks from a potential gross domestic product (GDP) slowdown, or investment delays. A prolonged drop in trade volumes could strain vendors and suppliers in the export supply chain, leading to rising credit stress.

CIMB downgraded the banking sector to “neutral” from “overweight” previously, as it cut its 2025 earnings growth forecast to 0.7% (from 9.0%) due to a 25 basis points (bps) overnight policy rate cut, higher credit cost assumptions, and slower projected loan growth.

As for ports, CIMB said the impact would likely hit key transhipment hubs, such as Port Klang, with potential cargo diversion — particularly US-bound containers — to alternative routes like the Port of Singapore. This could hurt throughput and utilisation, dragging near-term earnings.

“That said, the recent tariff hike at Port Klang should help cushion the impact of softer volumes on revenue. Westports [Holdings Bhd] (KL:WPRTS) has already guided for flat container growth in 2025, citing global trade uncertainties amid rising protectionism. Nonetheless, resilient intra-Asia trade is expected to support baseline activity across Malaysian ports,” it added. 

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