Broker Name: CGS International
Date of Report: October 10, 2025
Excerpt from CGS International report.
Report Summary
- Malaysia’s Budget 2026 continues the government’s path of fiscal consolidation, aiming to reduce the budget deficit to 3.5% of GDP, supported by GDP growth expectations of 4.0-4.5%.
- No major tax shocks or broad subsidy removals were announced, and the budget maintains significant cash handouts and support for all segments of society, including civil servants, gig workers, and first-time homebuyers.
- Sectoral impacts include positives for consumer, tourism, healthcare, utilities, and renewable energy, though construction spending was below expectations and there was no mention of major projects like MRT3.
- Tax adjustments include a new carbon tax on select industries and higher excise duties on tobacco and alcohol, but these are expected to have minimal market impact.
- Market reaction is likely to be muted as the budget is seen as supportive of the general public rather than providing significant catalysts for the equity market; the KLCI year-end target is maintained at 1,690.
- Sector ratings: Overweight on Banking & Finance, Construction, Healthcare, Consumer Discretionary, REITs, Utilities; Neutral on Agribusiness, Automotive, Property, Telecommunications; Underweight on Consumer Staples, Gaming, Technology.
- Top sector picks include banks (Hong Leong, RHB, CIMB), brewers (Heineken, Carlsberg), construction (Gamuda, IJM, MCement), consumer (MRDIY, Mynews), healthcare (IHH), and utilities (Tenaga, Malakoff).
- Malaysia remains committed to clean energy transition, digital infrastructure, and AI ecosystem development, with substantial allocations for R&D and incentives for green technologies and energy projects.
- The overall tone of the budget is inclusive and prudent, focusing on social welfare, sustainable growth, and long-term reforms rather than immediate market stimulus.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website : https://www.cgs-cimb.com/
