Broker Name: CGS International Securities
Date of Report: December 9, 2025
Excerpt from CGS International Securities report.
Report Summary
- Malaysia is poised for a strong market rebound in 2026, supported by high exemptions from US reciprocal tariffs, making it less vulnerable to trade risks compared to ASEAN peers.
- The narrowing interest rate spread between the US Federal Reserve and Bank Negara Malaysia is expected to support the ringgit and act as a catalyst for the local stock market, especially given Malaysia’s high domestic demand exposure.
- Malaysia offers relative political stability and ongoing policy reforms, which are improving its fiscal deficit and supporting a bullish GDP forecast of 4.6% for 2026.
- Despite large foreign outflows in recent years, Malaysia’s stock market is considered oversold, and a reversal in foreign sentiment could drive significant inflows.
- Key sector beneficiaries include industrial properties, construction (especially data centers), consumer staples and discretionary (boosted by government cash handouts and wage increases), and selected banks with exposure to civil servants.
- The property and REIT sectors are expected to benefit from robust commercial and industrial demand, REIT monetization, and a stable retail segment, while the office segment remains muted.
- Earnings growth for the KLCI is projected to recover to 8.5% in 2026, led by financials, telcos, utilities, and oil & gas, after a subdued 2025 due to specific sectoral drags.
- Sector outlooks: Overweight on banks (NIM recovery, stable loan growth), plantations (higher biodiesel demand supports CPO prices), construction, and selected consumer names; Neutral on auto and some consumer staples due to rich valuations and lack of near-term catalysts.
- Risks include sudden shifts in US monetary policy, further trade tensions, delays in government reforms, or unfavorable new regulations for key sectors.
- CGS introduces a 2026 KLCI target of 1,810, reflecting an optimistic view on Malaysia’s macro and corporate earnings trajectory.
Above is an excerpt from a report by CGS International Securities. Clients of CGS International Securities can be the first to access the full report from the CGS International Securities website: https://www.cgsi.com
