SOUTHEAST ASIA: Emerging markets faced a volatile start to the week on Monday as escalating global trade tensions rattled investor confidence. Stocks in export-heavy Southeast Asian economies saw sharp declines, particularly in the Philippines, Malaysia, and Indonesia, as markets reacted to rising uncertainty from the United States and its trade policies. Meanwhile, Singapore’s stock market bucked the trend, hitting a record high led by a strong performance from DBS Group, which benefited from an optimistic outlook for 2025.
Southeast Asia grapples with falling stocks and weaker currencies
According to the latest report from The Star, equities in Southeast Asia, particularly in the Philippines, Malaysia, and Indonesia, saw significant losses, with stock prices dropping between 0.1% and 2%. Indonesia’s stock market, in particular, hovered near its lowest point since June 2023. As the trade conflict between the U.S. and China continues to evolve, analysts are bracing for further volatility, particularly as President Trump signals potential new tariffs.
Experts suggest this uncertainty could further destabilize global markets and dampen investor sentiment, particularly in economies heavily reliant on exports.
In addition to falling stock prices, regional currencies like the Malaysian ringgit, Indonesian rupiah, and Taiwan dollar all weakened against the U.S. dollar. The Malaysian ringgit saw a notable drop of 0.7% as investors reacted to the challenging economic outlook in China, a key trading partner.
Trade war fears – U.S. tariffs weighing heavily on global markets
Trade tensions reached new heights after U.S. President Donald Trump announced plans to impose tariffs on all imports of aluminium and steel, adding fuel to concerns over a potential global trade war. The decision led to a decline in commodity-related currencies and added pressure on Asian equities as markets anxiously awaited further moves from the U.S. administration. Analysts, including those at Maybank, warned that these tensions could escalate into even greater volatility in the first half of 2025, as Trump is expected to ramp up tariff threats and trade rhetoric.
Robeco’s Peter van der Welle also noted that the level of uncertainty surrounding U.S. trade policy is at its highest point in four decades, aside from the 2019 U.S.-China trade war peak. With further trade announcements likely to target China, Europe, or Japan, investors are expected to remain cautious and prepare for continued market fluctuations.
Singapore defies regional trends – DBS drives record highs
While much of Southeast Asia faced downturns, Singapore’s stock market stood out, with the benchmark index climbing to a record high. This surge was largely driven by a strong performance from DBS Group, which posted impressive quarterly profits and hinted at improved net interest income for 2025. The bank’s positive outlook, coupled with plans for a dividend capital return, sent shares soaring by as much as 4.1% on the day.
While the Singapore dollar remained stable, market observers will be closely watching political developments in the Philippines, as Vice President Sara Duterte’s resistance to her impeachment could lead to further instability. The local peso traded flat ahead of the central bank’s monetary policy meeting scheduled for February 13.
While the global trade landscape remains fraught with uncertainty, Southeast Asia’s diverse economic performances—ranging from record highs in Singapore to declines elsewhere—highlight the region’s complex response to the shifting geopolitical environment.