Trump 2.0: A Silver Lining for Asian Markets?

Kuala Lumpur, March 14 – Foreign fund flows in 2025 have remained unfavorable so far, with net foreign outflows totaling RM6.2 billion, according to Rakuten Trade. However, analysts see a potential silver lining as global investors reassess their positions in light of Donald Trump’s possible return to the White House.

Foreign Flows: A Trump-Induced Shake-Up?

Rakuten Trade anticipates another volatile year for foreign fund movements, largely dictated by the extent of Trump’s policy decisions. While uncertainty looms, there is an upside—non-U.S.-based funds could start unwinding their U.S. holdings and redirect capital towards Asian markets, improving foreign fund flows in the region.

Retail Investors Stay on the Sidelines

Meanwhile, retail participation in Malaysia’s stock market remains sluggish. The surge in IPOs last year, with 55 listings raising RM7.4 billion, has absorbed significant liquidity, particularly from the small-cap segment.

More concerning, however, is the high oversubscription rate of these IPOs, which has resulted in funds being locked up unproductively. Retail investor participation dropped from 26% in January 2024 to a low of 16% in September, and is currently hovering at around 18%.

Outlook: A Shift in Market Dynamics?

Despite current challenges, the shifting global investment landscape could benefit Asian markets. If capital rotation away from the U.S. picks up pace, Malaysia and its regional peers may see an uptick in foreign inflows. However, for retail investors to re-engage meaningfully, improved market conditions and better liquidity management will be key.

With 2025 shaping up to be another unpredictable year, market watchers will be keeping a close eye on how Trump’s policies influence global fund movements and whether Asia can capitalize on the shift.

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