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MALAYSIA could emerge as a key beneficiary of Europe’s potential move to diversify its trade and supply chains towards Asia, particularly as demand for electronics, semiconductors, palm oil and other core commodities strengthens, analysts said.
TA Securities said Malaysia’s electrical and electronics sector is strategically positioned to capture an export upswing as global supply chains increasingly shift away from overreliance on the United States.
The firm noted that this realignment presents fresh opportunities for Malaysian manufacturers, especially amid growing uncertainties in trans-Atlantic trade relations.
However, it cautioned that challenges remain, particularly in securing access to high-technology components that are subject to US patents and export restrictions, which could limit the pace of expansion in advanced manufacturing.
In the palm oil sector, TA Securities said market opportunities in Europe remain open, but environmental and sustainability concerns continue to pose significant barriers.
The firm stressed that Malaysia must further strengthen green certification standards and sustainable practices to ensure continued access to European markets.
“If Europe diversifies its trade relations with Asia, Malaysia could benefit from stronger demand for electronics, palm oil and commodities,” it said in a research note.
Global trade sentiment has turned volatile following renewed tariff threats by US President Donald Trump after his return from the World Economic Forum in Davos.
Trump warned of imposing tariffs of up to 100 per cent on Canada should Prime Minister Mark Carney proceed with trade agreements involving China, a move widely seen as a direct response to Carney’s remarks at the summit.
Such threats are unlikely to be taken lightly by Canada, given the United States’ heavy reliance on Canadian energy supplies.
Analysts said Trump’s stance has not only unsettled markets but has also strained trans-Atlantic relations, increasing the likelihood of heightened geopolitical tensions in the near term.
The widening rift between Europe and the United States is expected to deepen scepticism towards US leadership, potentially shaping Europe’s strategic choices in the years ahead.
European leaders are now anticipated to accelerate efforts to reduce dependence on Washington economically, militarily and diplomatically, while expanding engagement with other global powers.
China and India are expected to emerge as key partners in Europe’s diversification agenda, while direct negotiations with Russia on critical issues may become more frequent, potentially sidelining US mediation altogether.
This geopolitical realignment could trigger ripple effects across financial markets. Analysts said Europe’s growing scepticism towards the US may translate into reduced holdings of US assets, weakening confidence in the dollar.
At the same time, commodities such as gold and silver are expected to gain renewed appeal as safe-haven assets amid heightened uncertainty.
Against this backdrop, TA Securities said Malaysia’s economic performance in 2025 demonstrated strong resilience despite global uncertainty driven by reciprocal tariffs and geopolitical strains.
The country’s total trade surpassed RM3 trillion for the first time, recording a trade surplus of RM151.8 billion.
The robust performance also lent support to the ringgit, underpinned by stronger-than-expected fourth-quarter 2025 gross domestic product growth of 5.7 per cent year-on-year, solid inflows from foreign tourist spending and expectations of a more accommodative US monetary policy stance.
The research firm noted that the ringgit briefly strengthened past the RM4.00 level against the US dollar last Friday and could gain further ground if the US Federal Reserve maintains a dovish narrative at its policy meeting this week, even as the US federal funds rate is expected to remain unchanged within the 3.50 to 3.75 per cent range. - January 26, 2026
